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The long-term effects of childhood exposure to the earned income tax credit on health outcomes

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Abstract

The Earned Income Tax Credit (EITC) is a central component of the U.S. safety net, benefiting about 25 million families. Using variation in the federal and state EITC, this paper evaluates the long-term impact of EITC exposure during childhood on the health of young adults. We find that an additional $100, or a 3% increase, in the average annual EITC exposure between birth and age 18 increases the likelihood of reporting very good or excellent health by 2.6% and decreases the likelihood of being obese by 4.1% between ages 22 and 27. The effects of EITC exposure are stronger for children raised in a single-parent household and for children with lower-educated parents.

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... Because effects of EITC expansions on maternal mental health are concentrated among both subgroups, we conclude that the likely primary mechanism through which the EITC impacts maternal mental health is through the direct refundable tax credit received for married mothers and potentially a combination of the credit and its employment effects for unmarried mothers. State EITC expansions are associated with improved mental health for married mothers only and have no impact on employment 1 Among other mechanisms, EITC expansions are associated with improved children's test scores (Dahl & Lochner, 2012), children's long-term educational attainment levels (Bastian & Michelmore, 2018), and improved children's long-term health (Braga et al., 2019). Improved human capital and health outcomes for children may improve maternal mental health as well. ...
... This study contributes to a small but growing literature examining the spillover health benefits of the EITC program (Evans & Garthwaite, 2014;Boyd-Swan et al., 2016;Hoynes et al., 2015;Braga et al., 2019;Dow et al., 2019;Strully et al. 2010). Evans and Garthwaite (2014) and Boyd-Swan et al. (2016) have previously documented the impact of the expansion of the federal EITC program on maternal health of nonelderly adult women following the Omnibus Budget Reconciliation Acts of 1990 and 1993. ...
... The PSID analysis uses data between 1993 and 2015, and the sample is restricted to mothers with a high school degree or less. For details on the methodological approach, see Braga et al. (2019). expansions are associated with changes in state-to-state migration or marital status using data from the American Community Survey (ACS) and the BRFSS in Appendix Table S1. ...
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... An interesting finding in this article is that much of the beneficial effects of the minimum wage are associated with minimum wage increases during ages 0 to 5. This finding is similar to a recent study for EITC, showing that the effect of EITC income during childhood on self-reported general health (reporting excellent or very good health) of young adults is largest for income during their first five years of life (Braga et al., 2019). . It is also the case that increases in the minimum wage during other periods are associated with improvements in health, but are mostly not statistically significant and smaller. ...
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... The evidence on the net effect of this policy on child outcomes is mixed. While some studies find positive impacts on test scores and health (Dahl & Lochner 2012, Braga et al. 2019, Agostinelli & Sorrenti (2018) find that the substitution effect (less time with children) dominates the income effect for low wage workers. Løken et al. (2018), studying a work-encouraging welfare reform targeting single mothers in Norway, similarly find significant negative effects on children's test scores when their mothers were incentivized to increase their labor supply. ...
... Exposure to the EITC in childhood poten tially pro vi des many years of increased fam ily income, which could influence mar riage and fam ily for ma tion in adult hood through a vari ety of mech a nisms. For instance, pre vi ous research has linked the EITC with improved stu dent achievement Lochner 2012, 2017), increased edu ca tional attain ment (Bastian and Michelmore 2018;Manoli and Turner 2018), higher earn ings (Bastian and Michel more 2018), and bet ter health in adult hood (Braga et al. 2020). Increasing human cap i tal raises the oppor tu nity cost of early child bear ing (Ellwood and Jencks 2004;Wolfe et al. 2001) by improv ing the edu ca tional out comes of those exposed to the EITC in child hood; there fore, the EITC may lead to delays in mar riage and child bear ing. ...
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Using data from the Panel Study of Income Dynamics, this study analyzes the effect of exposure to the Earned Income Tax Credit (EITC) in childhood on marriage and childbearing in early adulthood. Results suggest that EITC exposure in childhood leads women to delay marriage and first births in early adulthood (ages 16–25), but has no effect on men. A $1,000 increase in EITC exposure in childhood leads to a 2%–3% decline in a woman's likelihood of having a first birth and a comparable decline in her likelihood of marrying by her early 20s. We find similar reductions in fertility among Black and White women, though marriage declines are concentrated among White women. Results are focused on children growing up in the bottom half of the income distribution and those who spent the majority of childhood residing with a single parent—two groups that are the primary beneficiaries of the EITC. These findings have important implications for the well-being of individuals exposed to the EITC in childhood, as well as their future children.
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... The data and empirical strategy are presented in Section 3; estimation results are provided in Section 4; and the paper concludes with some remarks in Section 5. (Barker 1998;Case et al. 2005;Braga et al. 2019) and also the evidence that stocks of health skills raise the productivity of schooling (Bhargava, 2008). ...
... Robins (1985) analiza las elasticidades de sustitución de un proyecto piloto de los impuestos negativos sobre la renta.18 Braga et al. (2019) encuentran que los niños en familias que reciben impuestos negativos sobre la renta muestran una mejor salud y es menos probable que padezcan obesidad de adultos.19 Blank, Card, y Robins (1999) para un análisis detallado del diseño de programas que puedan simultáneamente aliviar la pobreza y no dañar la empleabilidad de las personas minimizando el impacto fiscal. ...
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En los últimos años, los sistemas de renta básica universal y los sistemas de renta mínima se han situado en el centro del debate público. Este artículo plantea el papel que jugarían estas políticas ante los retos del futuro, como la revolución digital y la globalización, y compara ambos sistemas de transferencias, así como las posibles consecuencias que puede tener su implementación. Además, este artículo recopila evidencia empírica con el objetivo de ayudar a entender los efectos potenciales de estas políticas.
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