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Labor Supply Effects of the Earned Income Tax Credit: Evidence From Wisconsin's Supplemental Benefit for Families With Three Children

Cancian, Maria and Levinson, Arik

Abstract:

We examine the effect of the Earned Income Tax Credit (EITC) on labor supply, comparing outcomes in Wisconsin, which supplements the federal EITC for families with three children, to outcomes in states that do not supplement the federal EITC. Relative to previous studies, our cross–state comparison examines a larger difference in EITC subsidy rates, more similar treatment and control groups, and a policy that has been in place longer. Whereas most previous research has found significant effects of the EITC on labor force participation, we find no effect

Citation

Cancian, Maria and Levinson, Arik (2006), Labor Supply Effects of the Earned Income Tax Credit: Evidence From Wisconsin's Supplemental Benefit for Families With Three Children, National Tax Journal, 59:4, pp. 781-800

DOI: dx.doi.org/10.17310/ntj.2006.4.02