State-level Earned Income Tax Credit Research Articles

The Relationship Between State-Level Earned Income Tax Credits and Violent Crime.

Policies that provide economic support, such as the earned income tax credit (EITC), improve peoples' ability to meet their basic needs and reduce stress, which can reduce violence perpetration. Refundable state-level EITCs have been associated with decreases in multiple forms of violence (e.g., child abuse and neglect); however, it is unknown whether there is an association between the EITC and violent crime as captured by Uniform Crime Reports. Crime and violence remain a pressing concern for many communities across the nation. Using a longitudinal data set, we conducted fixed-effects regression models with year and state specified as fixed effects, to determine whether variations in generosity of state-level EITCs are related to the rate of violent crime. After adjusting for demographic covariates, refundable state-level EITCs remained significantly associated with reductions in criminal homicide compared to states without an EITC. As many states attempt to combat crime and prevent violence in their communities, anti-poverty measures such as the EITC provide a promising strategy for reducing the social and economic costs associated with violence.

Income assistance programs and population health – The dual impact of minimum wages and the earned income tax credit

In this study, we provide new evidence on the interaction of state-level minimum wages and Earned Income Tax Credit (EITC) laws on several measures of population health. Using data from the National Vital Statistics Reports between 1999 and 2018, we estimate difference-in-differences models to evaluate the dual impact of minimum wages and the EITC on various causes of mortality, such as suicides, motor accidents and assaults. While several researchers have examined the health effects of both these policies separately, few studies have examined the potential interaction effects of these policies. Specifically, while previous work has provided evidence that both minimum wages and the EITC can reduce suicide rates, our study contributes to the literature by showing that the policies have a positive dual impact on population health. We find that a $1 increase in minimum wages reduces death rates due to suicides and assaults by 3.8 percent and 15.2 percent in states with EITC laws, respectively. In contrast, we show that minimum wages do not impact these outcomes in states without state-level EITC laws.

The Impact of Social Networks on EITC Claiming Behavior

Abstract Using the Social Connectedness Index (Bailey, Cao, Kuchler, Stroebel et al., 2018) to capture county-to-county Facebook linkages, I explore how county-level earned income tax credit (EITC) claiming behavior changes when the county's out-of-state social network is exposed to a newly implemented state EITC. Having more out-of-state friends face a state EITC shifts the composition of EITC claims toward more self-employment claiming. EITC-claiming households' income distribution also shifts, moving away from the EITC region with smaller credits, toward income levels that generate the largest EITC. This mimics the direct impacts of state-level EITC policies, consistent with social networks increasing information or salience about EITC policy.

Evidence for the Role of State-Level Economic Policy in HIV Risk Reduction: State Earned Income Tax Credit Generosity and HIV Risk Behavior Among Single Mothers

We investigated the impact of State-level Earned Income Tax Credit (SEITC) generosity on HIV risk behavior among single mothers with low education. We merged individual-level data from the Behavioral Risk Factor Surveillance System (2002–2018) with state-level data from the University of Kentucky Center for Poverty Research and conducted a multi-state, multi-year difference-in-differences (DID) analysis. We found that a refundable SEITC ≥ 10% of the Federal Earned Income Tax Credit was associated with 21% relative risk reduction in reporting any high-risk behavior for HIV in the last year, relative to no SEITC. We also found that a 10-percentage point increase in SEITC generosity was associated with 38% relative risk reduction in reporting any high-risk HIV behavior in the last year. SEITC policy may be an important strategy to reduce the burden of HIV infections among women with low socioeconomic status, particularly single mothers.

Reducing the Number of Children Entering Foster Care: Effects of State Earned Income Tax Credits.

Foster care caseloads, an indicator of child maltreatment, are increasing. Children living in poverty are significantly more likely to be reported to the child welfare system and are overrepresented in foster care. Thus, it is critical to identify prevention strategies that can stem the flow of foster care entries, particularly among populations at higher risk. We used variations in the adoption and refund status of state-level Earned Income Tax Credit (EITC), a socioeconomic policy intended to reduce poverty, to examine their effect on foster care entry rates. Fixed-effects models, accounting for year- and state-fixed effects, demonstrated that a refundable EITC was associated with an 11% decrease in foster care entries compared to states without a state-level EITC after controlling for child poverty rate, racial/ethnic composition, education, and unemployment. Policies that strengthen economic supports for families may prevent child maltreatment and reduce foster care entries and associated costs.

How Do Government Benefits Affect Elections? Evidence from State Earned Income Tax Credits

Whether and how individuals link benefits they receive from the government to their voting behavior is a central question in political economy. We study this question using one of the largest social provision programs in the United States: The Earned Income Tax Credit (EITC). We exploit the staggered roll-out of state-level EITC programs to estimate the causal effect of the program on elections, voter behavior, and attitudes about the government. Contrary to predictions from the policy feedback literature, we show that the credit leads to higher vote shares and approval ratings for the implementing governor. These effects are temporally limited to the first years of the credit's availability, and dissipate over time. Taken together, our results suggest that voters are responsive to the benefit.

The effects of state-level earned income tax credits on suicides.

This study examines the relationship between state-level earned income tax credit (EITC) laws in the United States on suicides. Following findings in previous work showing that the EITC is associated with lower depression rates and reduced number of risky biomarkers, I estimated the effects of state EITC generosity on suicide rates. Using data for the years 1996 to 2016, a period with 74 state-level EITC policy changes, I find that introducing a high state EITC rate reduces suicide rates for adults aged 25 or above by 3.91%. The results are consistent across four different measures of EITC generosity.

Effects of State-Level Earned Income Tax Credit Laws on Birth Outcomes by Race and Ethnicity.

Purpose: Health disparities persist in birth outcomes by mother's income, education, and race in the United States. Disadvantaged mothers may experience benefit from supplements to family income, such as the earned income tax credit (EITC). We examined the effects of state-level EITCs on birth outcomes among women with a high school education or less, stratified by race and ethnicity.Methods: A quasi-experimental multistate and multiyear difference-in-differences design is used to assess effects of the presence and generosity of 23 state-level EITC laws on birth outcomes from 1994 to 2013. The methods utilized the U.S. National Vital Statistics System birth data for the outcomes: birth weight, probability of low birth weight (LBW; <2500 g), and gestation weeks.Results: Across all subgroups, any level of state EITC is associated with better birth outcomes with the largest effects seen among states with more generous EITCs. Black mothers experience larger percentage point reductions in the probability of LBW and increases in gestation duration. Among mothers with a high school education or less, results translate into 3760 fewer LBW babies with black mothers and 8364 fewer LBW babies with white mothers per year at the most generous state EITC level (i.e., 10% or more of federal and refundable). Hispanic and non-Hispanic mothers display relatively similar effects.Conclusions: The EITC at the federal and state level is an effective policy tool to reduce poverty and improve birth outcomes across racial and ethnic subgroups. Given the historically higher risk among black mothers, state-level EITC expansions offer one policy option to address this persistent health disparity.

Effects of state-level Earned Income Tax Credit laws in the U.S. on maternal health behaviors and infant health outcomes

The purpose of this paper is to investigate the effects of state-level Earned Income Tax Credit (EITC) laws in the U.S. on maternal health behaviors and infant health outcomes. Using multi-state, multi-year difference-in-differences analyses, we estimated effects of state EITC generosity on maternal health behaviors, birth weight and gestation weeks. We find little difference in maternal health behaviors associated with state-level EITC. In contrast, results for key infant health outcomes of birth weight and gestation weeks show small improvements in states with EITCs, with larger effects seen among states with more generous EITCs. Our results provide evidence for important health benefits of state-level EITC policies.

Foster care and the earned income tax credit

Foster care is a source of significant costs to both governments and foster children. Policies that provide income support to households potentially reduce entry into foster care via reducing child maltreatment and improving child behavior. As part of the American Recovery and Reinvestment Act in 2009 (ARRA2009), the federal government expanded the earned income tax credit (EITC), which is an important income support program for low-income working households. Using state-level data, we investigate the impact of this EITC expansion on state-level foster care entry rates. Typically, states with state-level EITC match federal EITC spending at a specific rate, meaning that increases in federal EITC spending increase state-level spending as well. We find that expansion of EITC decreased foster care entry rates by 7.43% per year in states with a state-level EITC, relative to those without. In models that separately examine foster care entry rates by age of the child, we find that the ARRA2009 had different effects on foster care entry based on the child’s age. We find that ARRA2009 decreased foster care entry rates for children age 11–15 by nearly 12% in states with a state EITC and it decreased foster care entry rates for children age 16–20 by roughly 17% in states with a state EITC, relative to states without a state EITC.

STATE EARNED INCOME TAX CREDITS AND THE PRODUCTION OF CHILD HEALTH: INSURANCE COVERAGE, UTILIZATION, AND HEALTH STATUS

The Earned Income Tax Credit (EITC) has been credited with reductions in poverty and increases in the labor force participation of single mothers. The credit has the potential to affect the health of children in recipient families through three channels: family income, maternal employment, and health insurance coverage patterns. We exploit variation in state-level EITCs to estimate the effects of the credit on health insurance coverage, utilization of medical care, and health status. We find that the EITC is associated with significant changes in health insurance coverage patterns for children age 6–14, increasing rates of private health insurance but producing offsetting decreases in public coverage. State EITCs are also associated with significant improvements in health status for older children, an effect consistent with higher family income.

Why All States Should Adopt a State-Level Earned Income Tax Credit: A Policy Argument

This article argues that states that do not currently have a state-level Earned Income Tax Credit (EITC) would benefit by adopting such a program. Relying on extensive literature, the article concludes that a state-level ETIC can effectively reduce poverty, especially among children; enhance employment by attracting new entrants into the labor market; reduce the regressive nature of the tax system; and bolster the economies of areas with high concentrations of poverty. This article estimates the costs for each state without a current program for fiscal year 2013. Overall, it argues that this program, which is widely supported by many interests, can benefit states greatly in simultaneously achieving several social policies with relative administrative ease.

The Effect of Earned Income Tax Credit Expansions on the Smoking Behavior of Women

We investigate the impact of Earned Income Tax Credit (EITC) expansions on the smoking behavior of women. The differential increases in federal EITC benefits by family size as part of the 1993 OBRA expansion allow for a comparison of smoking status changes between women with and without children and between mothers with one and more than one child. We exploit these changes in a difference-in-differences framework using data from the 1993-2001 waves of the Behavioral Risk Factor Surveillance System (BRFSS) to show that the increase in EITC benefits yielded a significant decline in the likelihood of smoking among unmarried women with less than a college degree. These results are also robust to an alternative measure of EITC expansion, specifically the maximum state-level EITC benefit (in dollars), which varies across states and over the full course of the sample time frame.

The Impact of the Earned Income Tax Credit on Poverty: Analyzing the Dimensions by Race and Immigration

This paper analyzes the effectiveness of the Earned Income Tax Credit (EITC) on poverty transitions, with an emphasis on native-born African–Americans and immigration. A probit model is estimated using data from the Current Population Survey (CPS), which evaluates the impact of EITC participation and immigration on transitions out of poverty. The EITC is found to be a useful tool in combating poverty and is effective for African–Americans, though only for women. More importantly, the results show that the implementation of state-level EITCs can mitigate the adverse effects of immigration for native-born African–Americans.

Should California Adopt an Earned Income Tax Credit?

Over the past thirty years, the federal earned income tax credit (EITC) has grown from a relatively modest program to the largest income transfer program in the country. For the tax year 2003, approximately $39.2 billion in EITC benefits were paid out to more than 22 million claimants - an average benefit of $1,772 per claimant. As the federal EITC has grown in both size and popularity, state government officials have begun to consider income transfer programs designed to build on its success. Among the programs most commonly considered is the state-level EITC. As of August 2005, nineteen states had adopted EITCs based on the federal credit. To date, however, the country's largest state, California, has refused to adopt a state-level EITC. In this article, I consider the arguments for a California EITC and examine an alternative policy option that has not yet been discussed in the literature - namely, that a state income transfer program may be designed not only to supplement the federal EITC, but also to exploit and take maximum advantage of the benefits provided by the federal program. This can be done through the adoption of state policies that increase the earned income of EITC recipients whose income falls within the phase-in range of the federal credit. Rather than just supplementing the federal credit, the idea would be to maximize the amount of federal EITC dollars flowing into the state by ensuring that each potential EITC beneficiary earns an amount of income equal to or greater than the plateau range within the federal EITC structure. A properly designed state program - i.e., one that takes account of the nuance and detail of federal tax law - can target state resources at those with the lowest levels of household income, while maximizing tax benefits available under federal law.

Using The EITC to Help Poor Families: New Evidence and a Comparison with the Minimum Wage

This paper evaluates the effects of the earned income tax credit (EITC) on poor families' earnings. Exploiting state-level variation in EITCs, we find that the EITC helps families rise above poverty-level earnings, primarily by inducing labor market entry in families that initially do not have an adult worker. Evidence based on the federal EITC is less supportive of a positive impact of the EITC. Finally, based on the state-level EITC results, our findings suggest that for the range of policy changes typical of recent history in the U.S., the EITC is more beneficial for poor families than is the minimum wage.