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Research ArticleArticle

Effective Policy for Reducing Poverty and Inequality?

The Earned Income Tax Credit and the Distribution of Income

Hilary W. Hoynes and Ankur J. Patel
Journal of Human Resources, October 2018, 53 (4) 859-890; DOI: https://doi.org/10.3368/jhr.53.4.1115.7494R1
Hilary W. Hoynes
Hoynes is a Professor of Economics and Public Policy at the Goldman School of Public Policy, University of California, Berkeley. She is also a Research Associate for the National Bureau of Economic Research. Ankur Patel is a Financial Economist at the U.S. Department of the Treasury.
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Ankur J. Patel
Hoynes is a Professor of Economics and Public Policy at the Goldman School of Public Policy, University of California, Berkeley. She is also a Research Associate for the National Bureau of Economic Research. Ankur Patel is a Financial Economist at the U.S. Department of the Treasury.
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Abstract

We examine the effect of the EITC on the poverty and income of single mothers with children using a quasi-experimental approach that leverages variation in generosity due to policy expansions across tax years and family sizes. We find that the income increasing effects of the EITC are concentrated between 75 and 150 percent of income-to-poverty with little effect at the lowest income levels and at levels of 250 percent of poverty and higher. We use these results to show that by failing to capture the indirect effects of the credit on earnings, static calculations of the antipoverty effects of the EITC may be underestimated by almost 50 percent.

JEL Classification
  • H24
  • I38
  • Received November 2015.
  • Accepted May 2017.

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Journal of Human Resources: 53 (4)
Journal of Human Resources
Vol. 53, Issue 4
2 Oct 2018
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Effective Policy for Reducing Poverty and Inequality?
Hilary W. Hoynes, Ankur J. Patel
Journal of Human Resources Oct 2018, 53 (4) 859-890; DOI: 10.3368/jhr.53.4.1115.7494R1

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Effective Policy for Reducing Poverty and Inequality?
Hilary W. Hoynes, Ankur J. Patel
Journal of Human Resources Oct 2018, 53 (4) 859-890; DOI: 10.3368/jhr.53.4.1115.7494R1
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  • The Intergenerational Transmission of Poverty and Public Assistance: Evidence from the Earned Income Tax Credit
  • The Earned Income Tax Credit, Family Complexity, and Childrens Living Arrangements
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  • Household Incomes in Tax Data: Using Addresses to Move from Tax-Unit to Household Income Distributions
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Keywords

  • H24
  • I38
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