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Abstract:
The effectiveness of the Earned Income Tax Credit (EITC) of benefiting low-income families depends on its economic incidence. The EITC is more effective if its incidence is captured by the worker. Interest in whether the EITC incidence is captured by the worker or the employer follows from the EITC's larger role in increasing low-income workers' labor supply. Using cross-sectional and cross-time variation in the federal and state EITCs with data from the Current Population Survey, I examine the effect of the 1993 EITC expansion on the wages of unmarried women. Accounting for the sample selection problem and the endogeneity of the EITC, I find no evidence of a statistically significant decrease in wages received by unmarried women who face larger increases in their EITC compared to those who face smaller increases. With a positive effect on labor supply but no adverse effect on wages, this study supports the EITC as an effective anti-poverty instrument.

Earned Income Tax Credit, Tax Incidence

Abstract:
The Earned Income Tax Credit (EITC) expansion affects labor supply and hence wages through changes in marginal tax rates (MTRs). This paper describes the effects of the 1993 EITC expansion on MTRs experienced by unmarried women. To demonstrate changes in MTRs, I use variation in the federal and state EITCs under the 1993 EITC expansion. Results suggest that the 1993 EITC expansion results in differential decreases in MTRs faced by unmarried women. Women with lower education experienced a larger decrease in their MTRs. Moreover, among women with the same education level, those with two or more children faced a larger decrease relative to those with one child and those with no children.

Earned Income Tax Credit, Marginal Tax Rates

Abstract:
The passage of the 2001 legislation that contains marriage-penalty-relief provisions renews interest in whether the Earned Income Tax Credit (EITC) influences the marriage decision. Using a sample of cohabiting women with children from the 2001 panel of the Survey of Income and Program Participation, I describe the distribution of the changes in the EITC marriage incentives associated with the EITC expansion for married couples in 2001 and examine whether the changes in the EITC marriage incentives are correlated with marriage decisions.

Earned Income Tax Credit, Marriage Penalty Relief

Abstract:
The Earned Income Tax Credit (EITC) expansion in 1993 substantially increases the maximum credits available to a family with two or more children compared to a family with one child and a family with no children. Using national survey data and this differential increase in the maximum credits, this study examines the effect of the 1993 EITC expansion on the labor supply of unmarried women. Moreover, I find evidence that previous studies may underestimate the effect of the EITC on hours of work, and therefore correct this inconsistency problem by using a Tobit model to estimate hours of work.

Earned Income Tax Credit, Labor Supply

Abstract:
With the pioneering success of In-Work-Benefit (IWB) programs in the UK (1971) and the US (1975), the programs have been gradually disseminated across countries. Previous studies review and compare descriptive features of the programs in selected economies, together with a few cases of non-adoption (for example, Germany versus the UK). We extend the literature by empirically searching for economic variables favorable to the IWB adoption across 103 countries from 1980-2006. Our findings suggest that good macroeconomic conditions tend to precede the adoption, subject to country-specific structural constraints and program features (refundability and assessment unit). Ranked by economic significance, the probability of IWB adoption increases with higher capita GDP, lower age dependency, lower GINI coefficient, higher unemployment rate, higher budget balance, and higher labor force participation. We also examine the role of tax base, subsidies, labor supply, and wages. After comparing countries with similar structural and macroeconomic environments, we conjecture that the prevailing non-adoption can be attributed to hard-to-measure influences, particularly social attitude towards inequality, bureaucratic quality and political tendency (i.e. liberal or conservative) of the government.

In-Work Benefit programs, Making Work Pay policies, International Comparison