Journal Article

The Earned Income Tax Credit for Single Mothers: Insurance Without Disincentives?

The Earned Income Tax Credit (EITC) is one of the single most important social insurance programs in place in the U.S. The purpose of this paper is to evaluate the insurance and incentive effects of the EITC on a central class of recipients: single mothers. To the authors of the paper, it is to their knowledge, the first attempt to analyze the EITC in a life-cycle decision problem with risky wages, risky family-composition, and limited self-insurance. The results indicate that the EITC provides substantial insurance to young single mothers and does not significantly distort labor supply decisions.

Source
Partner Resources
Topics/Subtopics
Asset Building
Earned Income Tax Credit
Publication Date
2012-12-01