The Long-Run Effects of the Earned Income Tax Credit on Women's Earnings

67 Pages Posted: 19 Dec 2017 Last revised: 22 May 2023

See all articles by David Neumark

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Peter Shirley

Luxembourg Institute of Socio-Economic Research (LISER)

Date Written: December 2017

Abstract

Using longitudinal data on marriage and children from the Panel Study of Income Dynamics from 1967 to 2016, we characterize women’s exposure to the federal and state Earned Income Tax Credit (EITC) during their first two decades of adulthood. We use measures of this exposure to estimate the long-run effects of the EITC on women’s labor market outcomes as mature adults, specifically at age 40. Our results suggest that exposure to a more generous EITC when women were unmarried and had older (school-age) children leads to higher earnings in the longer-run, and we find corresponding evidence suggesting that longer-run exposure of unmarried mothers to a more generous EITC increases cumulative labor market experience. Additionally, we find evidence to suggest that exposure to a more generous EITC when women had children while married leads to lower earnings and hours in the longer-run. For both groups, adjustments in hours worked along the intensive margin appear to drive these results. These longer-run effects are consistent with what we would expect from the short-run effects of the EITC on employment and hours predicted by theory and documented in other work.

Suggested Citation

Neumark, David and Shirley, Peter, The Long-Run Effects of the Earned Income Tax Credit on Women's Earnings (December 2017). NBER Working Paper No. w24114, Available at SSRN: https://ssrn.com/abstract=3089511

David Neumark (Contact Author)

University of California, Irvine - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Peter Shirley

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

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Campus Belval – Maison des Sciences Humaines
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Luxembourg

HOME PAGE: http://liser.lu

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