In this paper, I first summarize how the US Earned Income Tax Credit (EITC) operates and describe the characteristics of recipients. I then discuss empirical work on the effects of the EITC on poverty and income distribution, and its effects on labor supply. Next, I discuss a few policy concerns about the EITC: possible negative effects on hours of work and marriage, and problems of compliance with the tax system. I then briefly discuss some possible reforms to the structure of the current EITC.
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Paper provided by IFAU - Institute for Labour Market Policy Evaluation in its series Working Paper Series with number
2008:14.
Length: 30 pages Date of creation: 17 May 2008 Date of revision: Handle: RePEc:hhs:ifauwp:2008_014
Contact details of provider: Postal: Labour Market Policy Evaluation, P O Box 513, SE-751 20 Uppsala, Sweden Phone: (+46) 18 - 471 70 70 Fax: (+46) 18 - 471 70 71 Email: Web page: http://www.ifau.se/ More information through EDIRC
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Find related papers by JEL classification: D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
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