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

Dahl and Lochner (2012) provides some of the first causal evidence of the effects of family income on child achievement using changes in the Earned Income Tax Credit. Unfortunately, a coding error in the creation of total family income affects the first stage estimates and inflates the instrumental variable (IV) estimates. Importantly, it does not affect the reduced-form estimates or alter statistical significance of the IV estimates. This response shows that correcting this error does not alter the core findings or main message of the paper. (JEL H24, H31, I21, I38, J13)

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

The American Economic Review ◽

10.1257/aer.20150988 ◽

2017 ◽

Vol 107 (2) ◽

pp. 623-628 ◽

Cited By ~ 6

Author(s):

Samuel Lundstrom

Keyword(s):

Income Tax ◽

Family Income ◽

Causal Effect ◽

Earned Income Tax Credit ◽

American Economic Review ◽

Tax Credit ◽

Earned Income ◽

Reading Test Scores ◽

The Impact ◽

Child Achievement

In a recent article in the American Economic Review, Dahl and Lochner (2012) use changes in the Earned Income Tax Credit to estimate the causal effect of family income on child achievement. Their instrumental variable (IV ) estimates imply that a $1,000 increase in income raises combined math and reading test scores by about 6 percent of a standard deviation. I document a variable coding error. Correcting this error reduces the IV estimates by 32 percent; correcting this error does not change the qualitative conclusions of the study. (JEL H24, H31, I21, I38, J13)

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

The American Economic Review ◽

10.1257/aer.102.5.1927 ◽

2012 ◽

Vol 102 (5) ◽

pp. 1927-1956 ◽

Cited By ~ 317

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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