Experiments and Natural Experiments

0 0 q 0 0 source blundell and hoynes 2004 has in

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Unformatted text preview: : single women with children to single women without children) Source; Liebman (1998) figure 6 . N otes; Updated through 1998 using unpublished data from Liebman. The employment rate figure is based on a CPS sample of single women aged sixteen-forty-five who are not disabled or in school. Employment rate difference is the difference between the annual employment rate of single women with children and the annual employment rate of single women without children. 7 3.0 t o 75.8 percent. There is also some evidence ofnegative effect on hours for those in work, but this is rather small. Liebman (1998) and Meyer and Rosenbaum (2000) use a similar approach to examine the impact of all three of the EITC reforms. The estimated behavioral responses are very similar in magnitude to those found by Eissa and Liebman (1996). The Liebman results are summarized in figure 10.17. The figure plots the difference in employment rates of single women with and without children against the difference in the maximum EITC credit in 1996 dollars.’OThe figure shows that the relative increase in employment rates among single mothers tracks quite closely the expansion of the EITC. Meyer and Rosenbaum (2000) present similar calculations for several other comparison groups, including comparing single women with 10. In the early period, the difference in maximum credit is equal to the credit for families with children. Figure 10.17 takes into account that there was a small EITC for childless families starting in 1994. It is not clear whether Liebman (1998) took this into account in his calculation. 5000 EITC Amount as a Function of Earnings Married, 2+ kids Single, 2+ kids Married, 1 kid Single, 1 kid No kids 3000 Phase-out tax: 21% 2000 EITC Amount ($) 4000 Subsidy: 40% 1000 Subsidy: 34% 0 Phase-out tax: 16% 0 Source: Federal Govt 5000 10000 15000 20000 25000 30000 35000 40000 Earnings ($) 192 AmErICAN ECoNomIC JoUrNAL: ECoNomIC PoLICy AUgUST 2010 Panel A. One child 5,000 Wage earners Self-employed 4,000 3,000 2,000 EIC amount ($) Earnings density EIC amount 1,000 0 Source: Saez (2010), p. 192 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Earnings (2008 $) Panel B. Two or more children 5,000 Wage earners 4,000 EIC amount 3,000 unt ($) density Self-employed EIC a Earnin 2,000 1,000 0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Earnings (2008 $) Panel B. Two or more children 5,000 Wage earners 4,000 Earnings density EIC amount 3,000 2,000 EIC amount ($) Self-employed 1,000 0 Source: Saez (2010), p. 192 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Earnings (2008 $) Figure 4. Earnings Density and the EITC: Wage Earners versus Self-Employed Notes: The figure displays the kernel density of earnings for wage earners (those with no self-employment earnings) and for the self-employed (those with nonzero self employment earnings). Panel A reports the density for tax filers with one dependent child and panel B for tax filers with two or more dependent children. The charts include all years 1995–...
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This document was uploaded on 02/26/2014 for the course ECON 560 at UBC.

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