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The U.S. Earned Income Tax Credit, its Effects, and Possible Reforms

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  • Bruce D. Meyer

Abstract

In this paper, I first summarize how the U.S. 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.

Suggested Citation

  • Bruce D. Meyer, 2007. "The U.S. Earned Income Tax Credit, its Effects, and Possible Reforms," Working Papers 0720, Harris School of Public Policy Studies, University of Chicago.
    • Handle: RePEc:har:wpaper:0720
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    References listed on IDEAS

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    1. Boone, Jan & Bovenberg, Lans, 2006. "Optimal welfare and in-work benefits with search unemployment and observable abilities," Journal of Economic Theory, Elsevier, vol. 126(1), pages 165-193, January.
    2. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
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    Cited by:

    1. Denton R. Vaughan & Barbara A. Haley & Aref N. Dajani, 2021. "Ten years later: Self‐sufficiency of welfare mothers before the Great Recession," Poverty & Public Policy, John Wiley & Sons, vol. 13(2), pages 184-223, June.
    2. Udaya R. Wagle, 2012. "The Food Stamps Program and Economic Security Among Low‐Income Families, Part I," Poverty & Public Policy, John Wiley & Sons, vol. 4(4), pages 223-238, December.

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    More about this item

    Keywords

    EITC; poverty;

    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, Well-Being, 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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