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

In: Tax Policy and the Economy, Volume 35

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  • Diane Whitmore Schanzenbach
  • Michael R. Strain

Abstract

The Earned Income Tax Credit (EITC) is the cornerstone U.S. anti-poverty program, typically lifting over 5 million 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 non-workers 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.
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Suggested Citation

  • Diane Whitmore Schanzenbach & Michael R. Strain, 2020. "Employment Effects of the Earned Income Tax Credit: Taking the Long View," NBER Chapters, in: Tax Policy and the Economy, Volume 35, pages 87-129, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14526
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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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