Do single mothers in the United States use the Earned Income Tax Credit to reduce unsecured debt?

H. Shaefer (), Xiaoqing Song and Trina Williams Shanks

Review of Economics of the Household, 2013, vol. 11, issue 4, 659-680

Abstract: The Earned Income Tax Credit (EITC) is a refundable credit for low-income workers mainly targeted at families with children. This study uses the Survey of Income and Program Participation’s topical modules on Assets and Liabilities to examine associations between the EITC expansions during the early 1990s and the unsecured debt of the households of single mothers. We use two difference-in-differences comparisons over the study period 1988–1999, first comparing single mothers to single childless women, and then comparing single mothers with two or more children to single mothers with exactly one child. In both cases we find that the EITC expansions are associated with a relative decline in the unsecured debt of affected households of single mothers. While not direct evidence of a causal relationship, this is suggestive evidence that single mothers may have used part of their EITC to limit the growth of their unsecured debt during this period. Copyright Springer Science+Business Media, LLC 2013

Keywords: Earned Income Tax Credit; Single Mothers; Unsecured Debt; H23; H53; I38 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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DOI: 10.1007/s11150-012-9144-y

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