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

Diane Whitmore Schanzenbach, Michael R. Strain

NBER Working Paper No. 28041
Issued in October 2020, Revised in November 2020
NBER Program(s):Children, Labor Studies, Public Economics

The Earned Income Tax Credit (EITC) is the cornerstone U.S. 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 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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Document Object Identifier (DOI): 10.3386/w28041

Published: Employment Effects of the Earned Income Tax Credit: Taking the Long View, Diane Whitmore Schanzenbach, Michael R. Strain. in Tax Policy and the Economy, Volume 35, Moffitt. 2021