Does a Higher Income Have Positive Health Effects? Using the Earned Income Tax Credit to Explore the Income-Health Gradient

Income, the Earned Income Tax Credit, and Infant Health

ABSTRACT: This paper evaluates the health impact of a central piece in the U.S. safety net for families with children: the Earned Income Tax Credit. Using tax-reform induced variation in the federal EITC and the presence and generosity of state EITC’s, we examine the impact of the credit on infant health outcomes. We find that increased EITC income reduces the incidence of low birth weight and ...

The Earned Income Tax Credit and Reported Self-Employment Income

The Earned Income Tax Credit subsidizes earnings from both the wage sector and the self-employment sector. This paper uses tax return data to investigate how the EITC affects the reporting of self-employment income to the IRS. A difference-in-difference strategy is used, considering three expansions in the EITC and comparing changes across filers with and without children. The expansions are pr...

Does the Earned Income Tax Credit Reduce Saving by Low-Income Households?

This paper analyzes the effect of the Earned Income Tax Credit (EITC) on investment income. Policy-makers have devoted substantial time and resources toward increasing the saving rate of low-income households, yet the EITC provides a substantial disincentive for individuals to save and realize investment income. I find a one percent increase in the aftertax return to saving causes a 3.05 percen...

Does a Higher Minimum Wage Enhance the Effectiveness of the Earned Income Tax Credit?

Labor Supply and Income Effects of the Earned Income Tax Credit and Welfare Programs

This paper examines the effect of the Earned Income Tax Credit (EITC) and welfare programs on the labor supply and income of single mothers. We characterize the nonlinear budget constraint under these programs using a piecewise linear approximation and estimate nonparametrically a structural labor supply function. Employing a flexible functional form, we show that the EITC effect on hours of wo...