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The Long-Run Effects of the EITC on Women's Earnings

Distinguished Professor David Neumark, University of California, Irvine
When
Feb 07, 2019 from 12:00 PM to 01:00 PM (America/Los_Angeles / UTC-800)
Where
1130 K Street, Room LL3
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9164455161
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We use longitudinal data on marriage and children from the Panel Study of Income Dynamics to characterize women’s exposure to the federal and state Earned Income Tax Credit (EITC) during their first two decades of adulthood. We then use measures of this exposure to estimate the long-run effects of the EITC on women’s labor market outcomes as mature adults. We find evidence indicating that exposure to a more generous EITC when women were unmarried and had children leads to higher wages, earnings, and hours in the longer run.  We also find evidence that exposure to a more generous EITC when women had children but were married leads to lower earnings and hours in the longer run. These longer-run effects are to some extent consistent with what we would expect if the short-run effects of the EITC on employment that are documented in other work (and predicted by theory), are reflected in effects of the EITC on cumulative labor market experience and other consequences of labor market attachment that influence earnings. The results suggest that a more generous EITC can increase economic self-sufficiency among a group of women -- single, less-educated mothers -- who often experience low earnings, high poverty, and reliance on public assistance.

David Neumark is Distinguished Professor of Economics and Director of the Economic Self- Neumark PhotoSufficiency Policy Research Institute (ESSPRI) at UCI. He has made significant research contributions in numerous areas of labor economics that intersect with important public policy  issues. Neumark’s research on labor market discrimination has opened up new methods of    measuring discrimination. His early work on wage equation decompositions led to efforts to better tie these measurement methods to underlying models of discrimination. Neumark was one of the original contributors to the “new minimum wage research,” helping to pioneer the use of state-level minimum wage variation to estimate minimum wage effects.  His subsequent work moved well beyond the debate over employment effects, to original and influential contributions on the effects of minimum wages on the income distribution, long-run effects of minimum wages on human capital and earnings, and complementarities between minimum wages and the EITC. Neumark is a leading scholar on the economics of aging and age discrimination, having authored numerous studies on the measurement of age discrimination in labor markets and tests of alternative models of the age-earnings profile. Neumark’s current research agenda, as part of his activities as Director of ESSPRI, concern the long-run effects of alternative anti-poverty policies on earnings, income, poverty, and public assistance receipt (broadly defined, “economic self-sufficiency”). A good deal of this work focuses on the effectiveness of policies directed at disadvantaged neighborhoods, such as enterprise zones and other types of tax credit programs. 

 

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