The Impact of the Earned Income Tax Credit on Economic Well-being: A Comparison across Household Types
Using survey data from Earned Income Tax Credit (EITC) recipients in Madison County, New York, we evaluate the effectiveness of the EITC in improving the economic well-being of low-income households. In particular, we examine the impact of the EITC across household types. For tax years 2002 through 2004, we find that the EITC is responsible for significantly lowering the poverty rate of the sample, from 57 to 49 percent. The EITC has the largest impact on single parent households, lowering their poverty rate by 11.2 percentage points. However, the EITC has negligible effects on the poorest households in the sample â€“ childless singles. A majority (64 percent) of EITC recipients intends to use at least some of the refund on basic needs and almost half plan on using part of their refund for debt repayment. This suggests that the EITC helps the majority of recipients get by but not necessarily move toward economic independence. Somewhat surprisingly, single parent households in the sample are not that different from married parent households in terms of EITC amounts, poverty rates, use of credit, and participation in government programs, despite earning less.
|Date of creation:||Feb 2008|
|Date of revision:|
|Contact details of provider:|| Postal: 13 Oak Drive, Hamilton, NY 13346-1389|
Phone: (315) 228-7533
Fax: (315) 228-7033
Web page: http://www.colgate.edu/academics/departments-and-programs/economics
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August.
- Browning, Edgar K., 1995. "Effects of the Earned Income Tax Credit on Income and Welfare," National Tax Journal, National Tax Association, vol. 48(1), pages 23-43, March.
- Ellwood, David T., 2000. "The Impact of the Earned Income Tax Credit and Social Policy Reforms on Work, Marriage, and Living Arrangements," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1063-1106, December.
- John B. Horowitz, 2002.
"Income Mobility and the Earned Income Tax Credit,"
Western Economic Association International, vol. 40(3), pages 334-347, July.
- Jennifer L. Romich & Thomas Weisner, 2000. "How Families View and Use the EITC: Advanced Payment versus Lump-sum Delivery," JCPR Working Papers 138, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Hilary W. Hoynes & Marianne E. Page & Ann Huff Stevens, 2006.
"Poverty in America: Trends and Explanations,"
Journal of Economic Perspectives,
American Economic Association, vol. 20(1), pages 47-68, Winter.
- Maria Cancian & Arik Levinson, 2005.
"Labor Supply Effects of the Earned Income Tax Credit: Evidence from Wisconsin Supplemental Benefit for Families with Three Children,"
NBER Working Papers
11454, National Bureau of Economic Research, Inc.
- Cancian, Maria & Levinson, Arik, 2006. "Labor Supply Effects of the Earned Income Tax Credit: Evidence from Wisconsin's Supplemental Benefit for Families with Three Children," National Tax Journal, National Tax Association, vol. 59(4), pages 781-800, December.
- Romich, Jennifer L. & Weisner, Thomas, 2000. "How Families View and Use the EITC: Advance Payment versus Lump Sum Delivery," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1245-66, December.
- Timothy M. Smeeding & Katherin Ross Phillips & Michael O'Connor, 2000. "The EITC: Expectation, Knowledge, Use and Economic and Social Mobility," JCPR Working Papers 139, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Smeeding, Timothy M. & Phillips, Katherin Ross & O’Connor, Michael, 2000. "The EITC: Expectation, Knowledge, Use, and Economic and Social Mobility," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1187-210, December.
- Neumark, David & Wascher, William, 2001.
"Using The EITC to Help Poor Families: New Evidence and a Comparison with the Minimum Wage,"
National Tax Journal,
National Tax Association, vol. 54(n. 2), pages 281-318, June.
- David Neumark & William Wascher, 2000. "Using the EITC to Help Poor Families: New Evidence and a Comparision with the Minimum Wage," NBER Working Papers 7599, National Bureau of Economic Research, Inc.
- Johnson, Nicholas, 2000. "State Low-Income Tax Relief: Recent Trends," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 403-16, September.
- Saul D. Hoffman & Laurence S. Seidman, 2003. "Helping Working Families: The Earned Income Tax Credit," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number hwf, November.
When requesting a correction, please mention this item's handle: RePEc:cgt:wpaper:2008-02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chad Sparber)
If references are entirely missing, you can add them using this form.