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Employment Effects of the Earned Income Tax Credit: Taking the Long View

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  • Diane Whitmore Schanzenbach
  • Michael R. Strain

Abstract

The earned income tax credit (EITC) is the cornerstone US anti-poverty program for families with children, typically lifting millions of children out of poverty each year. Targeted to low-income households with children and only available to those who work, the EITC contains strong incentives for nonworkers to become employed. Most of the existing economics literature focuses on federal EITC expansions in the 1980s and 1990s. This paper takes a longer view, studying all federal expansions since the program’s inception in 1975. We find robust evidence that EITC expansions increase the extensive margin of labor supply.

Suggested Citation

  • Diane Whitmore Schanzenbach & Michael R. Strain, 2021. "Employment Effects of the Earned Income Tax Credit: Taking the Long View," Tax Policy and the Economy, University of Chicago Press, vol. 35(1), pages 87-129.
    • Handle: RePEc:ucp:tpolec:doi:10.1086/713494
    DOI: 10.1086/713494
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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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