Suchergebnisse

In this article, I review the most prominent provision of the federal income tax code that targets low-income tax filers, the Earned Income Tax Credit (EITC), as well as the structurally similar Child Tax Credit and Additional Child Tax Credit. I discuss the programs' goals: distributional, promoting work, and limiting administrative and compliance costs. The article reviews the history of the programs, the predicted economic effects, and what is known about program impacts and distributional consequences. I conclude that the EITC effectively targets low-income households and is efficient in reducing poverty while encouraging work and that increases in after-tax household incomes lead to improved outcomes over the life course for children of those households. I propose reforms to the program, including policies that expand the generosity of the credit and increase take-up, as well as structural reforms that include spreading benefits throughout the year and reducing reliance on paid tax preparers.

Economists have strong theoretical predictions about how in-kind transfer programs -- such as providing vouchers for food -- impact consumption. Despite the prominence of the theory, there has been little empirical work documenting actual responses to in-kind transfers. In this work, we leverage previously underutilized variation in the date of the county-level original implementation of the Food Stamp Program in the 1960s and early 1970s. Using the Panel Study of Income Dynamics, we employ difference-in-difference methods to estimate the impact of program availability on food spending, labor supply and family income. Consistent with theoretical predictions, we find that the introduction of food stamps leads to a decrease in out of pocket food spending, an increase in overall food expenditures, and a decrease (although insignificant) in the propensity to take meals out. The results are quite precisely estimated for total food spending, with less precision in estimating the impacts on out of pocket food costs. We find evidence of small work disincentive impacts in the PSID, which is confirmed with an analysis of the 1960, 1970 and 1980 Census.

In‐work credits grew in popularity worldwide during the late 1990s and 2000s as a means of reforming welfare systems in ways that could both encourage work and reduce poverty. This paper reviews the role of in‐work tax credits in the UK and the US, what is known and remains to be known about their impacts and distributional consequences, and the possibilities for reform. Evidence is clear that in‐work credits reduce poverty and can encourage lone parents to work, but have minimal impacts, in aggregate, on second earners. Spending on in‐work credits has grown in the UK, but there have been two major overhauls of the way these are structured so that, on current plans, the UK will not have an identifiable in‐work credit by 2023. In the US, in‐work assistance has grown in generosity and reach since the 1980s, thanks to broad political support for the Earned Income Tax Credit (EITC) and the (less‐targeted) Child Tax Credit. Future debates in the UK should focus on the rise of in‐work poverty, particularly amongst couples, with some needed focus on the design of in‐work benefits, a debate where economic analysis and evidence should have a major role to play. In the US, the policy discussion should be about whether to increase substantially the EITC for those without children, and how best to maintain or expand the credit's generosity for those with children.

In this paper, we examine the effects of economic cycles on low-to moderate-income families. We use variation across states and over time to estimate the effects of cycles on the distribution of income, using fine gradations of the household income-to-poverty ratio. We also explore how the effects of cycles affect the risk of falling into poverty across demographic groups, focusing on age, race/ethnicity, and family type. We conclude by testing to see whether these relationships have changed in the Great Recession. We discuss the results in light of the changes in the social safety net in recent decades.

The Great Recession marks the worst downturn since those of the early 1980s. A large literature considers how the public safety net responded to this shock. We instead consider the responsiveness of one dimension of the private safety net. Families can react to negative shocks by moving in with relatives or downsizing. We use across-state over-time variation to estimate the effects of cycles on living arrangements, paying particular attention to young adults. We find living arrangements are cyclical, but effects are small. Surprisingly given the press attention, we find no evidence that things are different in the Great Recession.