Panel Paper: Does the EITC Reduce Supplemental Security Income Program Participation?

Friday, November 8, 2019
Plaza Building: Concourse Level, Plaza Court 2 (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Cassandra Benson, U.S. Air Force Academy

In 2017, approximately 1.2 million children between the ages of 0 and 18 received Supplemental Security Income (SSI) payments totally just over $9.6 billion. Youth on SSI tend to be particularly disadvantaged with high rates of school dropout, low employment rates in early adulthood, and high arrest rates. Child poverty remains a primary hypothesis for growth in the child SSI caseload. The Earned Income Tax Credit (EITC) has been shown to significantly reduce child poverty and improve child health. I test how exposure to the Earned Income Tax Credit as a child affects the likelihood an individual receives SSI payments between the ages of 15 and 18. Exogenous variation in exposure to the EITC is derived from the maximum credit available to the child in his state of residence each year between the ages of 0 and 18. Preliminary reduced-form estimates indicated that exposure to an additional $1000 each year reduces the likelihood that a child receives income from SSI by 0.34 percentage points (26 percent). Exposure to a larger EITC between the ages of 13 and 18 has the largest impact on SSI receipt. I find no evidence that the primary channel through which the EITC reduces SSI is improved health of the child; exposure to a larger EITC does not reduce the likelihood a child reports a physical or cognitive impairment.

Full Paper: