
Using the EITC to Help Poor Families: New Evidence and a Comparision with the Minimum Wage
Author(s) -
David Neumark,
William Wascher
Publication year - 2000
Publication title -
national tax journal
Language(s) - English
Resource type - Reports
DOI - 10.3386/w7599
Subject(s) - economics , labour economics , minimum wage , wage , demographic economics
This paper evaluates the effects of the earned income tax credit (EITC) on poor families. Exploiting state-level variation in EITCs, we find that the EITC helps families rise above poverty-level earnings. This occurs by inducing labor market entry in families that initially do not have an adult in the workforce. Evidence based on the federal EITC is less supportive of a positive impact of the EITC on poor families. Finally, our results suggest that for the range of policy changes typical of recent history in the U.S., the EITC is more beneficial for poor families than is the minimum wage.