The Impact of Government Cash Transfers on Birthweight: New Evidence from State Earned Income Tax Credits
Saturday, November 14, 2015 : 8:50 AM
Zamora (Hyatt Regency Miami)
*Names in bold indicate Presenter
Health plays an important role in the intergenerational transmission of inequality. Parental circumstances affect newborn health, which in turn affects the future educational and earnings outcomes of those children. Poor infant health—and lower education and wages in the future—are transmitted across the generational arc: women who were born with low birth weight are more likely to deliver low birth weight babies themselves, and this effect is greater for low-income women. Government cash transfers have been found to have a positive and significant effect on birth weight, but causal estimates of their impact are outdated, relying on exogenous variation from the 1993 Earned Income Tax Credit (EITC) expansion that greatly increased benefits available to low-income mothers with two children, but hardly increased benefits for mothers with one child. I exploit variation in the timing and generosity of state-level refundable tax credits. In addition to the timing of when these credits were implemented, there is significant variation both across states and within a state over time in the generosity of benefits, which I exploit to estimate the impact of additional income from programs like the EITC on birth weight.