Examining the effect of the earned income tax credit and welfare.
This Institute for Research and Poverty study uses a unique dataset, created by matching administrative data from public assistance records, unemployment insurance records, and federal tax returns for a sample of California residents, to study the employment effects of the earned income tax credit (EITC). At the core of the analysis is a set of four tests used to assess the causal effects of the EITC on employment.The first test is based on the intuition that if the EITC alters employment, all else being equal, employment rates families with two or more children should grow relative to the employment rates of families with one child. The second test examines whether people eligible for the EITC actually file tax returns and claim it. The third test is based on the intuition that, if the EITC is causing employment differences between families with two or more children relative to those with one child, we should expect to see no employment differences between families with two children and families with three or more kids. The fourth test conditions the sample on those who do not file tax returns and again examines employment changes in the 1990s for families with two or more children relative to families with one child.
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| Title Annotation: | noted studies |
|---|---|
| Publication: | Policy & Practice |
| Article Type: | Brief article |
| Geographic Code: | 1USA |
| Date: | Mar 1, 2006 |
| Words: | 207 |
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| Next Article: | The interaction of child support and TANF. |
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