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State Earned Income Tax Credits and Participation in Regular and Informal Work

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  • Gunter, Samara

Abstract

This paper examines how low-income single parents alter their regular and informal labor supply in response to the earned income tax credit (EITC). Variation in state EITCs from 1997–2005 identifies changes in informal and regular labor supply of unmarried low-income parents in response to tax credits. The informal-sector participation of single fathers declines by 7.3 percentage points, conditional on working in the regular sector, if a state EITC increases by 10 percent of the federal credit. Regular-sector hours worked per week increase by 4.5 hours and informal sector hours per week fall by 2.2 hours with no significant effect on total hours.

Suggested Citation

  • Gunter, Samara, 2013. "State Earned Income Tax Credits and Participation in Regular and Informal Work," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(1), pages 33-62, March.
  • Handle: RePEc:ntj:journl:v:66:y:2013:i:1:p:33-62
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    References listed on IDEAS

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    Cited by:

    1. Marcelo Bergolo & Guillermo Cruces, 2014. "Work and tax evasion incentive effects of social insurance programs. Evidence from an employment-based benefit extension," CEDLAS, Working Papers 0161, CEDLAS, Universidad Nacional de La Plata.
    2. Bergolo, Marcelo & Cruces, Guillermo, 2016. "The Anatomy of Behavioral Responses to Social Assistance When Informal Employment Is High," IZA Discussion Papers 10197, Institute for the Study of Labor (IZA).
    3. Bergolo, Marcelo & Cruces, Guillermo, 2014. "Work and tax evasion incentive effects of social insurance programs," Journal of Public Economics, Elsevier, vol. 117(C), pages 211-228.
    4. Derrick M. Anderson & Andrew B. Whitford, 2015. "Developing Knowledge States: Technology and the Enhancement of National Statistical Capacity," Papers 1502.07625, arXiv.org.

    More about this item

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

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