Panel:
The EITC and Measures of Wage and Income Inequality
(Poverty and Income Policy)
*Names in bold indicate Presenter
The Earned Income Tax Credit has been an active topic of research over the years, but questions still remain about its long-term impact on workers and families. This panel comprises three papers that examine the program's interactions with labor-market outcomes and subsequent inequality and mobility patterns over time.
Our first paper tackles the question of how the EITC spills over in ways that discourage older workers from remaining in the labor force. With the population aging and more grandparents having custody of young children, the paper brings up a crucial question about the impact EITC rules have on the incentives facing this population. The finding that the EITC has contributed to stagnation of labor force participation among older workers has implications for late-in-life income mobility and income inequality over age groups.
The second paper addresses an outstanding question regarding the EITC and intergenerational income mobility—that is, how did EITC dollars flowing to families translate into life-long gains for the children of receivers. How did increasing labor-force participation of single mothers moderate gains, and did this moderation vary by a child’s age? The ability to track generations across time with data “large” enough to examine sub-group characteristics has recently become available (see Chetty et al., 2018, and related work regarding the Opportunity Atlas). With these data, the authors are able to trace the adult outcomes of children of EITC receivers from the late 1970s to mid-1990s. The main focus of the paper is the impact of EITC on intergenerational mobility.
The third paper examines the DC EITC expansion to assess the program’s impact on income and inequality in a city with one of the highest rates of income inequality in the United States. The authors examine expansions in 2001 and 2009, which covers a period during which income inequality increased in DC due to the especially hard impact the Great Recession had on poorer families in the district. The authors provide evidence that the DC EITC mitigated these trends.
