The Impact of the Earned Income Tax Credit on Poverty: Analyzing the Dimensions by Race and Immigration

2008 ◽  
Vol 35 (4) ◽  
pp. 117-127 ◽  
Author(s):  
Olugbenga Ajilore
Keyword(s):  
African Americans ◽  
Income Tax ◽  
State Level ◽  
Probit Model ◽  
Earned Income Tax Credit ◽  
Tax Credit ◽  
Earned Income ◽  
Poverty Transitions ◽  
Using Data ◽  
The Impact

This paper analyzes the effectiveness of the Earned Income Tax Credit (EITC) on poverty transitions, with an emphasis on native-born African–Americans and immigration. A probit model is estimated using data from the Current Population Survey (CPS), which evaluates the impact of EITC participation and immigration on transitions out of poverty. The EITC is found to be a useful tool in combating poverty and is effective for African–Americans, though only for women. More importantly, the results show that the implementation of state-level EITCs can mitigate the adverse effects of immigration for native-born African–Americans.

scholarly journals Can antipoverty programmes save lives? Quasi-experimental evidence from the Earned Income Tax Credit in the USA

BMJ Open ◽  
2020 ◽  
Vol 10 (8) ◽  
pp. e037051
Author(s):  
Peter Muennig ◽  
Daniel Vail ◽  
Jahn K Hakes
Keyword(s):  
Outcome Measures ◽  
Income Tax ◽  
State Level ◽  
Earned Income Tax Credit ◽  
Secondary Outcome ◽  
Tax Credit ◽  
Earned Income ◽  
Quasi Experimental ◽  
The Usa ◽  
The Impact

ObjectiveTo estimate the impact of state-level supplements of the Earned Income Tax Credit (EITC) on mortality in the USA. The EITC supplements the wages of lower-income workers by providing larger returns when taxes are filed.SettingNationwide sample spanning 25 cohorts of people across every state in the USA.Participants793 000 respondents within the National Longitudinal Mortality Survey (NLMS) between 1986 and 2011, a representative sample of the USA.InterventionState-level supplementation to the EITC programme. Some, but not all, states added EITC supplementation to varying degrees beginning in 1986 (Wisconsin) and most recently in 2015 (California). Participants who were eligible in states with supplementary programmes were compared with those who were not eligible for supplementation. Comparisons were made both before and after implementation of the supplementary programme (a difference-in-difference, intent-to-treat analysis). This quasi-experimental approach further controls for age, gender, marital status, race or ethnicity, educational attainment, income and employment status.Primary and secondary outcome measuresThe primary outcome measure was survival at 10 years. Secondary outcome measures included survival at 5 years and survival to the end of the intervention period.ResultsWe find an association between state supplemental EITC and survival, with a HR of 0.973 (95% CI=0.951–0.996) for each US$100 of EITC increase (p<0.05).ConclusionState-level supplemental EITC may be an effective means of increasing survival in the USA.

scholarly journals The Oregon Earned Income Credit’s Impact on Child Poverty

2019 ◽  
Author(s):  
David W. Rothwell ◽  
Bruce Weber ◽  
Leanne Giordono
Keyword(s):  
Young Children ◽  
Income Tax ◽  
Child Poverty ◽  
Poverty Rate ◽  
Earned Income Tax Credit ◽  
Tax Credit ◽  
Earned Income ◽  
Poverty Threshold ◽  
Using Data ◽  
The Impact

Oregon has a refundable earned income tax credit (OEIC) that is equal to 8 percent of the Federal Earned Income Tax Credit (EITC). In 2017, Oregon introduced a unique supplement to the OEIC that provided an additional 3% of the Federal EITC to families with children under age 3. To date, there has been no research examining the impact of the OEIC on child poverty. Using data from the Current Population Survey, we simulate the static effects of this unique state OEIC on overall poverty, child poverty, and early child poverty rates in Oregon. We find that the OEIC does not yield a change in the estimated headcount poverty rate for either children or young children. However, focusing exclusively on changes in poverty rates underestimates the impact of the OEIC. The overall estimated impact on the poverty gap and poverty severity is greater – about 2 to 4 percent. Children and young children in families closer to the poverty threshold experience reductions in the poverty gap and poverty severity by about 6 to 9 percent. We tested four policy simulations and found that a simulated OEIC set at 11% of EITC for children and 29% for young children would significantly decrease the child and young child poverty rates by 4 percent and 9 percent, respectively. To reduce more poverty via the OEIC would require substantially more resources which may not be feasible.

scholarly journals The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit

2012 ◽  
Vol 102 (5) ◽  
pp. 1927-1956 ◽  
Author(s):  
Gordon B Dahl ◽  
Lance Lochner
Keyword(s):  
Income Tax ◽  
Family Income ◽  
Causal Effect ◽  
Earned Income Tax Credit ◽  
Tax Credit ◽  
Earned Income ◽  
Short Run ◽  
Reading Test Scores ◽  
Run Test ◽  
The Impact

Using an instrumental variables strategy, we estimate the causal effect of income on children's math and reading achievement. Our identification derives from the large, nonlinear changes in the Earned Income Tax Credit. The largest of these changes increased family income by as much as 20 percent, or approximately $2,100, between 1993 and 1997. Our baseline estimates imply that a $1,000 increase in income raises combined math and reading test scores by 6 percent of a standard deviation in the short run. Test gains are larger for children from disadvantaged families and robust to a variety of alternative specifications. (JEL H24, H31, I21, I38, J13)

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