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Labor Supply Response to the Earned Income Tax Credit

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  • Nada Eissa
  • Jeffrey B. Liebman

Abstract

This paper examines the impact of the Tax Reform Act of 1986 (TRA86), which included an expansion of the earned income tax credit, on the labor force participation and hours of work of single women with children. We identify the impact of TRA86 by comparing the change in labor supply of single women with children to the change for single women without children. We find that between 1984–1986 and 1988–1990, single women with children increased their relative labor force participation by up to 2.8 percentage points. We observe no change in the relative hours worked by single women with children who were already in the labor force.

Suggested Citation

  • Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 605-637.
  • Handle: RePEc:oup:qjecon:v:111:y:1996:i:2:p:605-637.
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    File URL: http://hdl.handle.net/10.2307/2946689
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    References listed on IDEAS

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    1. Holtzblatt, Janet & McCubbin, Janet & Gillette, Robert, 1994. "Promoting Work Through the EITC," National Tax Journal, National Tax Association, vol. 47(3), pages 591-607, September.
    2. Slemrod, Joel, 1990. "Optimal Taxation and Optimal Tax Systems," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 157-178, Winter.
    3. J. K. Scholz, "undated". "The earned income tax credit: Participation, compliance, and antipoverty effectiveness," Institute for Research on Poverty Discussion Papers 1020-93, University of Wisconsin Institute for Research on Poverty.
    4. Saul D. Hoffman & Laurence S. Seidman, 1990. "The Earned Income Tax Credit," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number eitc, November.
    5. Zabel, Jeffrey E, 1993. "The Relationship between Hours of Work and Labor Force Participation in Four Models of Labor Supply Behavior," Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 387-416, April.
    6. Holtzblatt, Janet & McCubbin, Janet & Gillette, Robert, 1994. "Promoting Work Through the EITC," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(3), pages 591-607, September.
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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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