Panel Paper: The Earned Income Tax Credit and Parent-Child Time Use

Friday, November 9, 2018
Hoover - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Taryn Morrissey, American University

The gaps in achievement and development between children from low-income and high-income families are large, persistent, and have cascading impacts across the life course (Reardon, 2011; Reardon & Portilla, 2016). Although exposure to educational resources and activities increased among low-income children over the last decade, wide income gaps in parental engagement persist (Bassok, Finch, Lee, Reardon, & Waldfogel, 2016; Kalil, Ziol-Guest, Ryan, & Markowitz, 2016). Lower-income families have fewer resources to help children thrive, including access to educational materials, health care, or high-quality educational activities, and recent research shows that low-income children have less quality time with their parents (Kalil et al., 2016).

This study examines whether the addition of money via the receipt of the Earned Income Tax Credit (EITC), one of the U.S.’s largest safety net programs, helps to mitigate this parent-child time penalty. Using quasi-experimental analyses that exploit state and time variation in federal and state EITC programs with nationally representative time-diary data from the 2003 to 2015 waves of the American Time Use Survey-Current Population Survey (ATUS-CPS), this study estimates the plausibly causal effects of income on the quantity and quality of parent-child time. The ATUS-CPS data were merged using state and year identifiers to the University of Kentucky Center for Poverty Research National Welfare database, which contains annual state-level information on a wide range of federal and state characteristics. The amount of time respondents with children spent with children (in the aggregate and in specific activities, such as reading, play) served as the dependent variable. Each activity was coded as a continuous measure of minutes per reference day and as a binary measure of whether the respondent engaged in that activity at all.

Four separate difference-in-differences analyses (Angrist & Pischke, 2009) were conducted using samples of low-income, less-educated, employed respondents with children that exploited four policy variations: 1) the increased federal EITC rate for households with three or more dependents following the American Recovery and Reinvestment Act (ARRA) in 2009; 2) the implementation of Virginia’s EITC program in 2006; 3) the implementation of Connecticut’s EITC program in 2011; and 4) the seasonality of receipt of EITC refunds to assess short-term effects.

Preliminary results suggest that EITC receipt and larger EITC refunds increase the likelihood of and the amount of time parents engage in educationally enriching time with their children, particularly in reading and in helping with homework. Reading effects were driven by parents with children under five years of age, and unmarried parents showed stronger effects for both reading and homework time compared to married parents. The seasonality effects yielded few effects, with the exception of EITC-eligible respondents spending more time working and less time with family at tax time relative to near-eligible respondents. Falsification tests using high-income parents with children yield few effects, as expected. Future analyses will assess the robustness of findings by testing different specifications of the EITC-eligible and near-eligible groups, the years included for pre- and post-policy change, and event history analyses.