Association for Public Policy Analysis & Management

The Earned Income Tax Credit (EITC) has become one of the primary components of the U.S safety net for poor families, but very little is known about the dynamics and persistence of EITC eligibility. This paper uses data from the Panel Study of Income Dynamics (PSID) to measure persistence of eligibility for the EITC, paying particular attention to persistence across multiple spells of eligibility. We find that single-female headed households have extremely persistent eligibility for the EITC, with 62 to 71 percent of these families becoming eligible for the credit maintaining their eligibility for five or more years over the subsequent decade. When considering all household types just beginning a spell of eligibility, we find that half are eligible for more than five years in the next decade. These results point to substantially more persistence in EITC eligibility than prior work based in IRS administrative data. This is due to both our consideration of multiple spells of eligibility and to the ability to follow single parents across transitions in marriage and household structure in the PSID.