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

David Neumark, Peter Shirley

NBER Working Paper No. 24114
Issued in December 2017, Revised in January 2019
NBER Program(s):Children, Labor Studies, Public Economics

We use longitudinal data on marriage and children from the Panel Study of Income Dynamics to characterize women’s exposure to the federal and state Earned Income Tax Credit (EITC) during their first two decades of adulthood. We then use measures of this exposure to estimate the long-run effects of the EITC on women’s labor market outcomes as mature adults. We find evidence indicating that exposure to a more generous EITC when women were unmarried and had children leads to higher wages, earnings, and hours in the longer-run. We also find evidence that exposure to a more generous EITC when women had children but were married leads to lower earnings and hours in the longer-run. These longer-run effects are consistent with what we would expect if the short-run effects of the EITC on employment that are documented in other work, and predicted by theory, are reflected in effects of the EITC on cumulative labor market experience and other consequences of labor market attachment that influence earnings.

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Document Object Identifier (DOI): 10.3386/w24114

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