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Periodic Earned Income Tax Credit (EITC) Payment, Financial Stress and Wellbeing: A Longitudinal Study

Author

Listed:
  • Karen Z. Kramer

    (University of Illinois at Urbana-Champaign)

  • Flávia Cristina Drumond Andrade

    (University of Illinois at Urbana-Champaign)

  • Andrew J. Greenlee

    (University of Illinois at Urbana-Champaign)

  • Ruby Mendenhall

    (University of Illinois at Urbana-Champaign)

  • Dylan Bellisle

    (University of Chicago)

  • Renee Lemons Blanks

    (Chicago Public Schools)

Abstract

The Earned Income Tax Credit (EITC) addresses the economic needs of low-income families, but its annual distribution in one lump-sum limits recipients’ ability to handle financial emergencies that arise throughout the year. We examine the relationship between an advanced periodic payment of the EITC and recipients’ wellbeing. We compare the perceived financial stress of recipients receiving a traditional lump-sum payment to a group that received four advanced payments spread throughout the year. Periodic payment recipients experienced significantly lower levels of perceived financial stress. This relationship was partly mediated by less need to borrow money, lower levels of food insecurity, and fewer unpaid bills. Therefore, periodic payments may enhance the positive association between the EITC and the financial wellbeing of families.

Suggested Citation

  • Karen Z. Kramer & Flávia Cristina Drumond Andrade & Andrew J. Greenlee & Ruby Mendenhall & Dylan Bellisle & Renee Lemons Blanks, 2019. "Periodic Earned Income Tax Credit (EITC) Payment, Financial Stress and Wellbeing: A Longitudinal Study," Journal of Family and Economic Issues, Springer, vol. 40(3), pages 511-523, September.
    • Handle: RePEc:kap:jfamec:v:40:y:2019:i:3:d:10.1007_s10834-019-09618-2
    DOI: 10.1007/s10834-019-09618-2
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    References listed on IDEAS

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    Cited by:

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    2. Terri Friedline & Zibei Chen & So’Phelia Morrow, 2021. "Families’ Financial Stress & Well-Being: The Importance of the Economy and Economic Environments," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 34-51, July.
    3. Angela Sorgente & Michela Zambelli & Margherita Lanz, 2023. "Are Financial Well-Being and Financial Stress the Same Construct? Insights from an Intensive Longitudinal Study," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 553-573, September.
    4. Elise Barboza-Salerno, Gia, 2024. "Material Hardship, Labor Market Characteristics and Substantiated Child Maltreatment: A Bayesian Spatiotemporal Analysis," Children and Youth Services Review, Elsevier, vol. 157(C).
    5. Yoshie Sano & Sheila Mammen & Myah Houghten, 2021. "Well-Being and Stability among Low-income Families: A 10-Year Review of Research," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 107-117, July.
    6. Jorge González-Chapela & Raquel Ortega-Lapiedra, 2021. "Reform of the Personal Income Tax in Spain: Effects on Internal Mobility of the Unemployed," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 166-181, March.

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