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Family Labor Supply and the Timing of Cash Transfers: Evidence from the Earned Income Tax Credit

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  • Tzu-Ting Yang

Abstract

This paper exploits the unique disbursement timing and benefit rules of the Earned Income Tax Credit (EITC) to provide new evidence on how families adjust their labor supply in response to receiving anticipated cash transfers. I find that income seasonality caused by EITC receipt leads to changes in the intra-year labor supply patterns of married women. On average, receiving a $1,000 payment significantly reduces the proportion of married women who work, by 1.3 percentage points, in the month when the EITC is received. Additionally, this labor supply response is mainly driven by those who are secondary earners or liquidity-constrained.

Suggested Citation

  • Tzu-Ting Yang, 2018. "Family Labor Supply and the Timing of Cash Transfers: Evidence from the Earned Income Tax Credit," Journal of Human Resources, University of Wisconsin Press, vol. 53(2), pages 445-473.
    • Handle: RePEc:uwp:jhriss:v:53:y:2018:i:2:p:445-473
    Note: DOI: 10.3368/jhr.53.2.0115-6857R1
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    Cited by:

    1. Marks, Mindy & Prina, Silvia & Tahaj, Redina, 2024. "Short-term labor supply response to the timing of transfer payments: Evidence from the SNAP program," Labour Economics, Elsevier, vol. 91(C).
    2. Marks, Mindy & Prina, Silvia & Tahaj, Redina, 2023. "Short-Term Labor Supply Response to the Timing of Transfer Payments: Evidence from the SNAP Program," IZA Discussion Papers 16299, Institute of Labor Economics (IZA).
    3. Günther Fink & B. Kelsey Jack & Felix Masiye, 2020. "Seasonal Liquidity, Rural Labor Markets, and Agricultural Production," American Economic Review, American Economic Association, vol. 110(11), pages 3351-3392, November.
    4. Timothy K. M. Beatty & Joakim A. Weill, 2024. "Social Security and High-Frequency Labor Supply: Evidence from Uber Drivers," Finance and Economics Discussion Series 2024-079, Board of Governors of the Federal Reserve System (U.S.).
    5. Lauren E. Jones & Kevin Milligan & Mark Stabile, 2019. "Child cash benefits and family expenditures: Evidence from the National Child Benefit," Canadian Journal of Economics, Canadian Economics Association, vol. 52(4), pages 1433-1463, November.
    6. Bastian, Jacob E. & Jones, Maggie R., 2021. "Do EITC expansions pay for themselves? Effects on tax revenue and government transfers," Journal of Public Economics, Elsevier, vol. 196(C).

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