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David Neumark, William Wascher
NBER Working Paper No. 7599*
Issued in March 2000
NBER Program(s): LS
PE
---- Abstract -----
This paper evaluates the effects of the earned income tax credit (EITC) on poor families. Exploiting state-level variation in EITCs, we find that the EITC helps families rise above poverty-level earnings. This occurs by inducing labor market entry in families that initially do not have an adult in the workforce. Evidence based on the federal EITC is less supportive of a positive impact of the EITC on poor families. Finally, our results suggest that for the range of policy changes typical of recent history in the U.S., the EITC is more beneficial for poor families than is the minimum wage.
*Published: Neumark, David and William Wascher. "State-Level Estimates Of Minimum Wage Effects: New Evidence And Interpretations From Disequilibrium Methods," Journal of Human Resources, 2002, v37(1,Winter), 35-62.
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