The Effect of Financial Incentives Under TANF and EITC on Economic Outcomes for Low Income Families
*Names in bold indicate Presenter
To answer this question, I use the Current Population Survey for 2001-2013. I estimate binomial probit models for employment, and income above poverty. To identify the effect of financial incentives under TANF and both the federal and state EITC, I exploit rate changes in the federal, and state EITC between 2001 and 2013 and changes in earned income disregard policies (if any) for the states. State TANF policies have not changed much during this time. I control for state economic indicators, individual demographics, time limits and sanctioning policy and spending on TANF cash and SNAP.
Over the years, the EITC has become the major source of income support for the working poor and TANF’s role as an income support program has declined. A rising share of TANF spending is directed toward work support and other services. Since both of these income support program focus on “making work pay”, it is important to assess how they work together. Understanding how incentives within these income support policies together affect the recipients will help policymakers to develop programs to help their low-income adults who seek greater self-sufficiency via employment.