The Effect of the Earned Income Tax Credit on the Intensive Margin of Labor Supply

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520 |a The Earned Income Tax Credit is a form of welfare awarded to eligible recipients as a refundable tax credit. It is awarded in three phases: the phase-in region, where the award value increases as income increases; the plateau region, at which recipients earn the maximum credit at a middle range of incomes; and the phase-out region, where the award dollar value decreases as income increases. This study attempts to quantify the effects of EITC on the hours worked by its recipients. We find that both single and married recipients tailor hours to maximize EITC earnings by bunching at the second kink. When in the plateau range, married EITC recipients tend to increase weekly hours worked by 5.60; upon moving into the phase-out region, however, these recipients decrease hours worked by 1.15 hours. Single recipients increase hours worked in the plateau range by 1.98 hours. When they enter the phase-out region, they decrease their labor supply by 0.35 hours per week. The findings suggest that EITC recipients manipulate hours worked to maximize the credits they receive.
500 |aThe author has given permission for this work to be deposited in the Digital Archive of Colorado College.
500 |aColorado College Honor Code upheld.
500 |aSenior Thesis -- Colorado College
500 |aBachelor of Arts
500 |abachelor
500 |aIncludes bibliographical references.
655 7|athesis|2marcgt
540 |aCopyright restrictions apply.
300 |a40 pages : illustrations
100 1 |aSmith, Brendan|ecreator
700 1 |aRedmount, Esther|ethesis advisor
700 1 |a|ethesis advisor
710 2 |aDepartment of Economics and Business|esponsor
710 2 |aColorado College|edegree grantor
650 1 |aEarned Income Tax Credit
650 1 |awelfare
650 1 |atax policy
650 1 |aintensive margin of labor supply
245 10|aThe Effect of the Earned Income Tax Credit on the Intensive Margin of Labor Supply
046 |k2015-05
260 |bColorado College|c2015-05|g2015-05
856 |u