TITLE

Earned Income Tax Credits and Labor Supply: New Evidence from a British Natural Experiment

AUTHOR(S)
Leigh, Andrew
PUB. DATE
June 2007
SOURCE
National Tax Journal;Jun2007, Vol. 60 Issue 2, p205
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
With many countries considering the adoption of a system of earned income tax credits, it is useful to analyze how different types of credits affect labor supply and earnings. This paper focuses on a 1999 reform to the UK tax credit system, which increased the value of the credit and reduced the phaseout rate. Using panel data, with individual fixed effects, I compare eligibles and ineligibles within five groups: all individuals; those whose demographic characteristics predict that they will have low earnings; single women; women in couples; and men in couples. Over a 15-month period, boosting the credit appears to have raised the labor participation rates, hours, and earnings of those who were eligible to receive it.
ACCESSION #
25977863

 

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