The EITC and the Extensive Margin: A Reappraisal

202 Pages Posted: 30 Oct 2019 Last revised: 24 Feb 2022

See all articles by Henrik Kleven

Henrik Kleven

Princeton University - Princeton School of Public and International Affairs

Date Written: October 2019

Abstract

This paper reappraises the impact of the Earned Income Tax Credit (EITC) on labor supply at the extensive margin for single mothers. I investigate every EITC reform at the state and federal level since the inception of the policy. Apart from the federal 1993 reform, EITC expansions have not had any clear and significant effects on employment. The 1993 reform is associated with large employment effects, but these effects align more closely with confounding changes from welfare reform and the macroeconomy than with the EITC. I conduct a comprehensive analysis of the robustness of the EITC null result to model uncertainty.

Suggested Citation

Kleven, Henrik, The EITC and the Extensive Margin: A Reappraisal (October 2019). NBER Working Paper No. w26405, Available at SSRN: https://ssrn.com/abstract=3476485

Henrik Kleven (Contact Author)

Princeton University - Princeton School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

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