The EITC, Tax Refunds, and Unemployment Spells

Sara LaLumia

No 2011-08, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: The Earned Income Tax Credit generates large average tax refunds for low-income parents, and these refunds are distributed in a narrow time frame. I rely on this plausibly exogenous source of variation in liquidity to investigate the effect of cash-on-hand on unemployment duration. Among EITC-eligible women, unemployment spells beginning just after tax refund receipt last longer than unemployment spells beginning at other times of year. There is no evidence that tax refund receipt is associated with longer unemployment duration for men, or that the longer durations for women are associated with higher-quality subsequent job matches.

Keywords: Tax evasion; compliance; honesty; dependent exemption (search for similar items in EconPapers)
JEL-codes: H24 H26 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2011-07
New Economics Papers: this item is included in nep-cis, nep-his and nep-tra
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Journal Article: The EITC, Tax Refunds, and Unemployment Spells (2013)
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