Using the EITC to Help Poor Families: New Evidence and a Comparision with the Minimum Wage

David Neumark and William Wascher

No 7599, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: I32 J39 (search for similar items in EconPapers)
Date: 2000-03
New Economics Papers: this item is included in nep-pbe
Note: LS PE
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Citations: View citations in EconPapers (19)

Published as Neumark, David and William Wascher. "State-Level Estimates Of Minimum Wage Effects: New Evidence And Interpretations From Disequilibrium Methods," Journal of Human Resources, 2002, v37(1,Winter), 35-62.
Published as Neumark, David & Wascher, William, 2001. "Using The EITC to Help Poor Families: New Evidence and a Comparison with the Minimum Wage," National Tax Journal, National Tax Association, vol. 54(n. 2), pages 281-318, June Cita.

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