State Earned Income Tax Credits and Participation in Regular and Informal Work

CRCW and Fragile Families Working Paper WP11-03-FF

43 Pages Posted: 24 Feb 2011 Last revised: 26 Oct 2012

Samara Gunter

Colby College - Department of Economics

Date Written: April 30, 2012

Abstract

This paper examines how low-income single parents alter their regular and informal labor supply in response to the EITC. Variation in state EITCs from 1997–2005 identifies changes in informal and regular labor supply of unmarried low-income parents in response to tax credits. Single fathers’ informal-sector participation declines by 7.3 percentage points, conditional on working in the regular sector, if a state EITC increases by 10 percent of the federal credit. Regular-sector hours worked per week increase by 4.5 and informal-sector hours per week fall by 2.2 with no significant effect on total hours.

Keywords: informal economy, earned income tax credit

JEL Classification: H3, J2

Suggested Citation

Gunter, Samara, State Earned Income Tax Credits and Participation in Regular and Informal Work (April 30, 2012). CRCW and Fragile Families Working Paper WP11-03-FF. Available at SSRN: https://ssrn.com/abstract=1767567 or http://dx.doi.org/10.2139/ssrn.1767567

Samara Gunter (Contact Author)

Colby College - Department of Economics ( email )

Waterville, ME 04901
United States

Paper statistics

Downloads
66
Rank
281,688
Abstract Views
471