IDEAS home Printed from https://ideas.repec.org/a/taf/applec/44y2012i16p2035-2050.html
   My bibliography  Save this article

Expanding New York State's Earned Income Tax Credit Programme: the effect on work, income and poverty

Author

Listed:
  • Maximilian D. Schmeiser

Abstract

Given its favourable employment incentives and ability to target the working poor, the Earned Income Tax Credit (EITC) has become the primary antipoverty programme at both the federal and state levels. However, when evaluating the effect of EITC programmes on income and poverty, governments generally calculate the effect using simple accounting, where the value of the state or federal EITC benefit is added to a person's income. These calculations omit the behavioural incentives created by the existence of these programmes, the corresponding effect on labour supply and hours worked, and therefore the actual effect on income and poverty. This article simulates the full effect of an expansion of the New York State EITC benefit on employment, hours worked, income, poverty and programme expenditures. These results are then compared to those omitting labour supply effects. Relative to estimates excluding labour supply effects, the preferred behavioural results show that an expansion of the New York State EITC increases employment by an additional 14 244 persons, labour earnings by an additional $95.8 million, family income by an additional $84.5 million, decreases poverty by an additional 56 576 persons and increases costs to the State by $29.7 million.

Suggested Citation

  • Maximilian D. Schmeiser, 2012. "Expanding New York State's Earned Income Tax Credit Programme: the effect on work, income and poverty," Applied Economics, Taylor & Francis Journals, vol. 44(16), pages 2035-2050, June.
  • Handle: RePEc:taf:applec:44:y:2012:i:16:p:2035-2050
    DOI: 10.1080/00036846.2011.558478
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2011.558478
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/00036846.2011.558478?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. N. Eissa & H. W. Hoynes, "undated". "The Earned Income Tax Credit and the Labor Supply of Married Couples," Institute for Research on Poverty Discussion Papers 1194-99, University of Wisconsin Institute for Research on Poverty.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:ces:ifodic:v:6:y:2008:i:4:p:14567195 is not listed on IDEAS
    2. Richard V. Burkhauser, 2008. "Creating an EU Flexicurity System: An American Perspective," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(04), pages 36-40, December.
    3. Gulgun Bayaz Ozturk, 2018. "Anti‐Poverty Effects of In‐Kind Transfers Among Divorced or Separated Women in the United States," Poverty & Public Policy, John Wiley & Sons, vol. 10(1), pages 57-80, March.
    4. Jeannette Wicks-Lim & Jeffrey Thompson, 2010. "Combining Minimum Wage and Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to All U.S. Workers," Published Studies peri_mw_eitc_oct2010, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Richard V. Burkhauser, 2008. "Creating an EU Flexicurity System: An American Perspective," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(4), pages 36-40, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bargain, Olivier & Orsini, Kristian, 2006. "In-work policies in Europe: Killing two birds with one stone?," Labour Economics, Elsevier, vol. 13(6), pages 667-697, December.
    2. Eissa, Nada & Hoynes, Hilary Williamson, 2000. "Explaining the Fall and Rise in the Tax Cost of Marriage: The Effect of Tax Laws and Demographic Trends, 1984-97," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 683-712, September.
    3. Timothy M. Smeeding & Katherin Ross Phillips & Michael O'Connor, 1999. "The EITC: Expectation, Knowledge, Use, and Economic and Social Mobility," Center for Policy Research Working Papers 13, Center for Policy Research, Maxwell School, Syracuse University.
    4. Hélène Périvier, 2008. "Les femmes sur le marché du travail aux Etats-Unis," SciencePo Working papers Main hal-00973039, HAL.
    5. Tony Eardley, 2000. "Working but Poor? Low Pay and Poverty in Australia," The Economic and Labour Relations Review, , vol. 11(2), pages 308-338, December.
    6. Moffitt, Robert A., 2002. "Welfare programs and labor supply," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 34, pages 2393-2430, Elsevier.
    7. Mike Brewer & Paul Gregg, 2001. "Eradicating child poverty in Britain: welfare reform and children since 1997," IFS Working Papers W01/08, Institute for Fiscal Studies.
    8. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
    9. repec:spo:wpecon:info:hdl:2441/1203 is not listed on IDEAS
    10. Wu, Ximing & Perloff, Jeffrey M. & Golan, Amos, 2004. "Government Policy Effects on Urban and Rural Income Inequality," CUDARE Working Papers 25125, University of California, Berkeley, Department of Agricultural and Resource Economics.
    11. Rebecca M. Blank, 2000. "Distinguished Lecture on Economics in Government: Fighting Poverty: Lessons from Recent U.S. History," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 3-19, Spring.
    12. David T. Ellwood, 1999. "The Impact of the Earned Income Tax Credit and Social Policy Reforms on Work, Marriage, and Living Arrangements," JCPR Working Papers 124, Northwestern University/University of Chicago Joint Center for Poverty Research.
    13. Gabrielle Pepin, 2020. "The Effects of Child Care Subsidies on Paid Child Care Participation and Labor Market Outcomes: Evidence from the Child and Dependent Care Credit," Upjohn Working Papers 20-331, W.E. Upjohn Institute for Employment Research.
    14. Adam Looney & Monica Singhal, 2005. "The effect of anticipated tax changes on intertemporal labor supply and the realization of taxable income," Finance and Economics Discussion Series 2005-44, Board of Governors of the Federal Reserve System (U.S.).
    15. Hélène Périvier, 2008. "Les femmes sur le marché du travail aux États-Unis," Documents de Travail de l'OFCE 2008-12, Observatoire Francais des Conjonctures Economiques (OFCE).
    16. Rebecca M. Blank & David T. Ellwood, 2001. "The Clinton Legacy for America's Poor," NBER Working Papers 8437, National Bureau of Economic Research, Inc.
    17. Richard Blundell & Hilary W. Hoynes, 2004. "Has 'In-Work' Benefit Reform Helped the Labor Market?," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000, pages 411-460, National Bureau of Economic Research, Inc.
    18. Wolfgang Ochel, 2000. "Employment-conditional tax credit and benefit systems," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(03), pages 35-41, October.
    19. Cancian, Maria & Levinson, Arik, 2006. "Labor Supply Effects of the Earned Income Tax Credit: Evidence From Wisconsin's Supplemental Benefit for Families With Three Children," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(4), pages 781-800, December.
    20. Hélène Périvier, 2007. "Les femmes sur le marché du travail aux Etats-Unis: une mise en perspective avec la France et la Suède," Working Papers hal-00972845, HAL.
    21. Leigh Andrew, 2010. "Who Benefits from the Earned Income Tax Credit? Incidence among Recipients, Coworkers and Firms," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-43, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:44:y:2012:i:16:p:2035-2050. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.