PUBLICATIONS
"The Long-Term Impact of the Earned Income Tax Credit on Children’s Education and Employment Outcomes" with Kathy Michelmore
Journal of Labor Economics (2018, 36(4), 1127-1163)
Abstract: Using 4 decades of variation in the federal and state EITC, we estimate the impact of exposure to EITC expansions in childhood on education and employment outcomes in adulthood. Reduced-form results suggest that an additional $1,000 in EITC exposure when a child is 13–18 years old increases the likelihood of completing high school (1.3%), completing college (4.2%), and being employed as a young adult (1.0%) and earnings by 2.2%. Our analysis reveals that the primary channel through which the EITC improves these outcomes is increases in pretax family earnings.
Ungated version (with Appendix)
Media: Brookings, Tax Policy Center, National Affairs, Biden Forum, Brad DeLong, Medium, Chalkbeat
“The Rise of Working Mothers and the 1975 Earned Income Tax Credit”
American Economic Journal: Economic Policy (2020, 12(3), 44-75)
Abstract: The rise of working mothers radically changed the U.S. economy and the role of women in society. In one of the first studies of the 1975 introduction of the Earned Income Tax Credit, I find that this program increased maternal employment by 6 percent, representing one million mothers and an elasticity of 0.58. The EITC may help explain why the U.S. has long had such a high fraction of working mothers despite few childcare subsidies or parental-leave policies. I also find evidence that this influx of working mothers affected social attitudes and led to higher approval of working women.
Ungated version (with Appendix)
Media: AEA Chart of the Week, Brookings
“Do EITC Expansions Pay for Themselves? Effects on Tax Revenue and Public Assistance Spending” with Maggie R. Jones
Journal of Public Economics (2021, 1(196), 104355)
Abstract: This paper calculates the EITC's net cost by estimating effects, both direct and through recipients' behavioral changes, on tax revenue and government transfer spending. We show that the EITC increases labor supply and income, thereby increasing the taxes households pay and reducing the government transfer payments they receive. Using linked IRS--CPS data and several EITC policy changes, and focusing on married and unmarried women, we find that the EITC's net cost is only 17 percent of the ($70 billion) budgetary cost over a one-year period. Although the EITC is one of the U.S.’s largest and most important public assistance programs, the EITC is actually one of the U.S.’s least expensive anti-poverty programs.
Ungated version (with Appendix)
Media: The Economist, The Brookings Institution, Mother Jones, National Review, Poverty Research IRP, Council on Economic Policies, Confessions of a Supply-Side Liberal, Marginal Revolution
“How Did Safety-Net Reform Affect Early Adulthood among Adolescents from Low-Income Families?” with Jeff Grogger and Luorao Bian
National Tax Journal (2021, 74(3), 825-865)
Abstract: In the 1990s, the US safety net was substantially reformed. We ask how those reforms collectively affected early-career outcomes among youths who were teens when the reforms took effect. We consider employment, safety-net participation, marriage, and childbearing between the ages of 18 and 32. We take a dif-in-dif approach, tracking adolescents from two generations roughly 20 years apart. In each generation, we compare two groups, one of which was more likely to have been affected by safety-net reform than the other. We find evidence that safety-net reform increased women’s labor supply and decreased marriage.
“The EITC and Maternal Time Use: More Time Working and Less Time with Kids?” with Lance Lochner
Journal of Labor Economics (2022, 40(3), 573-611)
Ungated version (with Appendix)
Abstract: Parents spend considerable sums investing in their children's development, with their own time among the most important forms of investment. Given well-documented effects of the Earned Income Tax Credit (EITC) on maternal labor supply, it is natural to ask how the EITC affects other time allocation decisions, especially time with children. We use the American Time Use Surveys to study the effects of EITC expansions since 2003 on time devoted to a broad array of activities, with considerable attention to the amount and nature of time spent with children. Our results confirm prior evidence that the EITC increases maternal work and reduces time devoted to home production and leisure. More novel, we show that the EITC also reduces time spent with children; however, almost none of the reduction comes from time devoted to ``investment'' activities. Effects are concentrated among socioeconomically disadvantaged mothers, especially those that are unmarried. Results are also most apparent for mothers of young children. Altogether, our results suggest that the increased work associated with EITC expansions over time has done little to reduce the time mothers devote to active learning and development activities with their children.
“How Did Safety Net Reform Affect the Education of Adolescents from Low-Income Families?” with Jeff Grogger and Luorao Bian
Labour Economics (2022, 1(77), 102031)
Abstract: Roughly 25 years ago, the US safety net was substantially reformed. Here we ask how those reforms affected the educational attainment of youths who were teens at the time those reforms took place. We take a dif-in-dif approach, following adolescents from two generations roughly 20 years apart. In each generation, we compare two groups, one which was more likely to have been affected by safety-net reform, and one which was less likely to have been affected. Under some assumptions, our approach identifies the joint, or bundled, effects of the constituent policy changes that make up safety-net reform. We find evidence that safety-net reform may have reduced educational attainment for women, and had small positive effects on education for men. We offer suggestions as to why our findings differ from those of previous studies of the components of safety net reform.
“Overcoming Credit Constraints and Migrating Out of Rural and Distressed America” with Dan Black
Journal of Public Economics (Volume 234, June 2024, 105111)
Abstract: There is a strong and growing interest in helping families move to areas with higher economic opportunity. We exploit variation in the EITC to examine how relaxing credit constraints affects migration, with a focus on women from rural and economically distressed areas. We nd that relaxing credit constraints increases migration out of rural and distressed areas, to areas with higher labor force participation and lower unemployment rates. Many of these moves occur across counties or commuting zones, but we nd no effect on moving across states. We also find decreases in living doubled up with another family, and reductions in commute length. We are the first to show that the EITC relaxes credit constraints and helps women move to economic opportunity.
“Tax Credits in Rural and Economically Distressed Areas: More Bang Per Buck?”
International Tax and Public Finance (Volume 31, pages 136–159, 2024)
Abstract: Numerous papers show that Earned Income Tax Credit (EITC) expansions have increased maternal labor supply, but little is known about how this effect differs by geography or metropolitan status. Using various datasets and exploiting several EITC expansions, I find that the EITC consistently had larger positive effects on the labor supply of unmarried mothers in rural and economically distressed areas. Among married mothers, I find small negative effects in suburban and urban areas and small positive effects in rural areas. I also replicate and extend previous EITC research to show that these effects hold for EITC expansions spanning 1975 to the 2010s.
“How Would a Permanent 2021 Child Tax Credit Expansion Affect Poverty and Employment?”
National Tax Journal (Volume 77, Number 2, pp. 263–311)
Abstract: There is strong disagreement over how a permanent version of the 2020-to-2021 Child Tax Credit (CTC) change would impact poverty and employment. Previous research has used different approaches and concluded that a permanent CTC would lead between 0.3 and 1.5 million parents to stop working. I am the first to show how different elasticity assumptions affect both the predicted impact on parental employment and child poverty, and to decompose these effects by family type. Using CPS and ACS data, my preferred approach predicts that a permanent CTC would lead (1) 354,000--367,000 parents to stop working, (2) to a 28--30% decrease in child poverty, and (3) to a 43--49% decrease in deep child poverty. A permanent CTC would pull 3.0--3.1 million kids out of poverty and 1.3--1.5 million kids out of deep poverty. I show how different elasticities affect these estimates. Even in the unlikely scenario where unmarried mothers have an elasticity of 2.0 and all other parents have an elasticity of 0.25, child poverty would still fall by 20% (representing 2 million kids) and deep child poverty would fall by 30% (representing 1 million kids). I conclude that a permanent version of the 2021 CTC would reduce poverty and deep poverty by more than the 2020 CTC and Earned Income Tax Credit combined.
Media: CNBC, Niskanen Center
PAPERS UNDER REVIEW
“Universal Pre-K as Economic Stimulus: Evidence from Nine States and Large Cities in the U.S.” with C. Kirabo Jackson and Julia A. Turner
Abstract: While Universal Pre-Kindergarten (UPK) is often proposed as an economic stimulus, its market effects remain uncertain. We analyze UPK programs implemented across nine states and cities from 1995 to 2020, leveraging their staggered adoption for identification. UPK increased Pre-K enrollment and led to a 1.2% rise in labor force participation, a 1.5% increase in employment, and a 1.6% growth in hours worked, resulting in higher aggregate earnings. Employment effects were strongest for mothers but extended to other groups, primarily women. Impacts varied, with the largest effects observed in areas with high public Pre-K enrollment. Notably, each dollar spent on UPK generated between 3 to over 20 dollars in aggregate earnings – enough that tax revenues might fully cover costs.
“The EITC and Divorced Mothers: Delaying Remarriage to Find a Better Spouse?” with Ze Song
Abstract: We examine how expansions of the EITC and 1990s welfare reform affected the remarriage decisions of divorced mothers. While prior research finds modest and mixed effects of these policies on marriage overall, little is known about their impact on remarriage and spouse selection. Using four decades of PSID data, we document a sharp decline in remarriage rates among divorced mothers beginning in the mid-1990s. Exploiting variation in EITC generosity across states and time, we find that each $1,000 increase in the maximum EITC reduces remarriage rates by 1.5-2 percentage points within 1-10 years (a 6-8% decline). Results are robust to controls, alternative samples, and a simulated instrument strategy. We find no effect on first marriages. Among those who remarry, we find suggestive evidence that delayed remarriage leads to higher-quality spouses—with more education and higher earnings. Simulations using TAXSIM suggest that increased financial self-sufficiency—rather than mechanical marriage penalties—is the primary channel.
“Does Employment Shift Mothers' Voting Behavior and Political Identity?”
Abstract: This paper finds that while employment and voting are positively correlated, the causal effect is negative. Using EITC expansions and welfare reform as instruments, I show that working lowers voter turnout and increases conservatism among lower-income mothers. Voter registration, political knowledge, and civic engagement decline, while preferences for conservative policies rise. Effects are strongest for unmarried, younger, and less-educated mothers, especially those without working mothers. White women experience the largest Republican shift, driven in part by sorting into more conservative occupations and industries. Pro-work policies appear to have slowed the widening gender partisan gap by making lower-income mothers more conservative.
WORK IN PROGRESS
“When Policy Shapes Perception: The 2021 Child Tax Credit and Consumer Sentiment” with Melody Harvey
Abstract: Although consumer sentiment is a key macroeconomic indicator, we lack causal evidence on whether government policies themselves affect how people feel. This paper fills that gap by studying the expiration of the expanded 2021 CTC as a natural experiment. Using monthly microdata from the University of Michigan’s Consumer Sentiment Survey and a continuous difference‑in‑differences design, we find that the loss of CTC payments significantly reduced sentiment---especially among low‑income families with children---with effects persisting two years later. Results hold after controlling for inflation, interest rates, and macro trends, demonstrating that fiscal policy can have long‑lasting psychological effects.
“Evaluating the Impact of Expanded Tax Credits on the Wellbeing of Puerto Rican Families”
Abstract: This paper provides the first empirical evaluation of Puerto Rico’s EITC and CTC, analyzing how these refundable tax credits affect labor supply, income, and household well-being in a historically low-employment, high-poverty setting. I hand-collected and synthesized two decades of tax documents to construct the first comprehensive history of Puerto Rico’s EITC and CTC programs and use rich microdata from the Puerto Rico Community Survey, exploiting variation in credit generosity by family size and year. I find that the recent EITC and CTC expansions significantly increase employment, earnings, and total income—especially among unmarried mothers, low-education groups, and families in rural areas. Importantly, I document declines in poverty and welfare reliance, alongside modest improvements in housing, transportation access, and educational enrollment. While labor market effects are more pronounced for the EITC, both credits contribute to improvements in economic security and household well-being. Puerto Rico’s experience offers broader insights into the effectiveness of tax-based income support in lower-wage economies with large informal sectors.
“Unlocking Opportunity: The Long-Term Effects of EITC-Led Migration on Families and Intergenerational Mobility” with Leah Clark
Abstract: This paper investigates how refundable tax credits shape intergenerational mobility by influencing where low-income families live. We focus on the federal EITC and its state supplements, which vary in generosity and offer a unique opportunity to test whether place-based opportunity responds to income-based policy. Linking restricted-use Census and ACS data with administrative IRS records, we track low-income families over time and across geographies. We find that more generous tax credits help families move to higher-opportunity neighborhoods—areas associated with better educational and economic outcomes for children. In turn, children exposed to these higher-opportunity locations through EITC-induced moves grow up to earn more, be less likely to experience poverty, enjoy better health, and live in safer, more economically secure neighborhoods as adults. This project offers new evidence that income support policies can influence not only short-term behavior but also the geographic roots of upward mobility.
“How Elastic Is Labor Supply? Evidence from Thousands of Estimates under Varying Assumptions”
Abstract: This paper re-examines how economists estimate extensive-margin labor supply elasticities, focusing on unmarried mothers. I calculate elasticities as the ratio of observed changes in employment to changes in the return to work, driven by tax credit expansions over recent decades. Using results from several empirical studies and dozens of additional specifications that vary key assumptions—such as time windows, control groups, sample restrictions, and income definitions—I construct a comprehensive set of estimates. Across these approaches, elasticity values consistently fall in the range of 0.3 to 0.4, though alternative assumptions produce a minority of estimates that are notably smaller or larger. This stable pattern suggests a robust labor supply response to refundable tax credits and offers a credible benchmark for policy modeling and the design of in-work benefits.
“Do Wage Subsidies Increase Labor Force Participation? Evidence from Around the World”
“The Rise of Joint Custody and the Decline of U.S. Migration”
“Attitudes Towards Working Women and World War II”
RESTING PAPERS
"Unintended Consequences? More Marriage, More Children, and the EITC"
Abstract: The EITC provides a ``marriage bonus'' to some couples but a ``marriage penalty'' to others: the average incentive is theoretically ambiguous, has changed over time, and existing empirical evidence has been mixed. The EITC also encourages some households to have more children but others to have less. Using over 30 years of household panel data, I find that federal and state EITC expansions increase marriage and fertility, and decrease non-marital cohabitation. These results imply that some estimates in the EITC literature may be biased, since endogenous switching from unmarried to married or increasing fertility would violate the stable-group-composition condition required by difference in differences.
Twitter: @jacobbastian25
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