Work

Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings

Year: 2013

Type: article

Abstract: We estimate the impacts of the Earned Income Tax Credit on labor supply using local variation in knowledge about the EITC schedule. We proxy for EITC knowledge in a Zip code with the fraction of individuals who manipulate reported self-employment income to maximize their EITC refund. This measure varies significantly across areas. We exploit changes in EITC eligibility at the birth of a child to estimate labor supply effects. Individuals in high-knowledge areas change wage earnings sharply to obtain larger EITC refunds relative to those in low-knowledge areas. These responses come primarily from intensive-margin earnings increases in the phase-in region. (JEL H23, H24, H31, J22, J23, J31)

Source: American Economic Review

DOI: 10.1257/aer.103.7.2683

Authors: Raj Chetty, John N Friedman, Emmanuel Saez

Institutions: National Bureau of Economic Research, Harvard University, University of California, Berkeley

Language: English

Topic: Gender, Labor, and Family Dynamics

Subfield: Gender Studies

Field: Social Sciences

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Reduced inequalities

Open Access status: green

OpenAlex ID: W2125146074

FWCI: 75.93

Cites: 45

Cited by: 520

Related to: 9