The Effects of 1993 EITC Expansion on Marginal Tax Rates
Nanyang Technological University
December 5, 2007
National Tax Journal Papers and Proceedings, One Hundredth Annual Conference, 2007
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.
Number of Pages in PDF File: 17
Keywords: Earned Income Tax Credit, Marginal Tax Rates
JEL Classification: H2
Date posted: September 19, 2008 ; Last revised: June 4, 2009
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