Absence of conflict of interest.
Highlights
- The study's objective was to examine the impact of the 1993 Earned Income Tax Credit (EITC) expansion on employment for white women with children. The authors investigated a similar research question for Black women with children, the profile of which can be found here.
- The authors used a difference-in-differences design to estimate the impacts of the 1993 EITC expansion on employment for white women with children, using data from the 1990 to 2003 Current Population Survey. They used a statistical model to compare employment before and after the 1993 EITC expansion for women with and without children.
- The study found that the 1993 EITC expansion increased employment for white women with children.
- The quality of causal evidence presented in this report is moderate because it was based on a well-implemented non-experimental design. This means we are somewhat confident that the estimated effects are attributable to the 1993 Earned Income Tax Credit (EITC) expansion, but other factors might also have contributed.
Intervention Examined
Features of the Intervention
The Earned Income Tax Credit (EITC) is a federal tax credit created in 1975 to encourage parents with low and moderate incomes to work by offsetting payroll taxes and boosting their take-home pay. Over the years, the EITC has undergone several changes. The 1993 EITC expansion increased the subsidy rates and maximum credits for families with children and changed the phase rate for these families. This study focused on the impacts of the 1993 EITC expansion on women with children.
Features of the Study
The authors used a difference-in-differences design to estimate the impacts of the 1993 EITC expansion on employment for white women. The authors used data from the 1990 to 2003 Current Population Survey’s March Annual Social and Economic Supplement which included demographic information and labor market and income information for the previous year and thus covered tax years 1989 to 2002.
The study sample included unmarried and married white women in the United States aged 24 to 54 with some college education or below. Overall, the study sample included a total of 146,139 observations. Of these, 45,311 observations were for unmarried white women and 100,828 observations were for married white women. The treatment group included white women with children under 19 (or under 24 if a full-time student) while the comparison group included white women without children under 19 (or under 24 if a full-time student). The authors used a statistical model to compare employment before and after the 1993 EITC expansion for white women with and without children.
Findings
Employment
- The study found that the 1993 EITC expansion increased employment for white women with children by 1.72 percentage points This association was statistically significant.
- The study did not detect a statistically significant relationship between the 1993 EITC expansion and the number of hours worked by white women with children.
Considerations for Interpreting the Findings
The authors conducted several robustness checks to address potential threats to identification, address potentially confounding factors, and validate results. To address the concern that selecting groups based on education level could change the sample makeup over time due to education trends, the authors checked samples from specific education percentiles (like the bottom 70%) and found that the results were similar to those from their main sample. To address the concern that the 1993 EITC expansion overlapped with many states' changes to welfare policies, the authors examine states that did not change their welfare policies during the study period and found that results were similar to those from their full sample. To address the concern that local business cycles may have affected families with and without children differently, the authors conducted an extended specification that controlled for the ratio of state-level employment to the working population and its interaction term with the number of children; their results were similar to those from their main specification.
Causal Evidence Rating
Research Guidelines
Review Protocol: Living Systematic Annual Search and Review Protocol
Review Guidelines: Causal Evidence Guidelines