How Do EITC Recipients Spend Their Refunds?

16 Pages Posted: 18 May 2008

See all articles by Andrew Goodman-Bacon

Andrew Goodman-Bacon

Federal Reserve Bank of Chicago

Leslie McGranahan

Federal Reserve Bank of Chicago

Abstract

The authors determine what items are purchased using the earned income tax credit (EITC) - one of the largest sources of public support for lower-income working families in the U.S. They find that recipient households' EITC payments are used primarily for vehicle purchases and transportation spending, both of which are crucial to job access and consistent with the EITC's prowork goals.

Keywords: earned income tax credit, expenditure patterns, tax refunds, Personal Income and Other Nonbusiness Taxes and Subsidies, Fiscal Policies and Behavior of Economic Agents, Households, Government Policy, Provision and Effects of Welfare Programs

Suggested Citation

Goodman-Bacon, Andrew and McGranahan, Leslie, How Do EITC Recipients Spend Their Refunds?. Economic Perspectives, Vol. 32, No. 2, 2008. Available at SSRN: https://ssrn.com/abstract=1134060

Andrew Goodman-Bacon (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

Leslie McGranahan

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States
312-322-5023 (Phone)
312-322-2357 (Fax)

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