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The Earned Income Tax Credit (EITC) delivers substantial payments to low- and middle-income households with children. Some recipient households contain three generations, including grandparents of the EITC-eligible children. This paper investigates whether larger EITC payments are associated with improved financial well-being and health of grandparents living with their grandchildren. I find that exposure to a more generous EITC payment is associated with reductions in debt held by grandparents living in three-generation households, but it is not associated with improvements in grandparent health.

ABSTRACT:We use a panel of tax returns spanning 1999 to 2011 to provide evidence on household experiences during unemployment. A period of unemployment is associated with a 20 percent reduction in annual household wage earnings. Unemployment insurance (U.I.) compensates for half of lost wages. Households also partially compensate using a variety of income sources. Distributions from retirement accounts increase in the short run. Self-employment income and disability insurance payments increase over longer periods. More generous U.I. benefits crowd out wage income and are associated with increased retirement account distributions. This combination of responses is consistent with U.I. benefits lengthening unemployment spells.

A mother giving birth in December can claim child-related tax benefits when she files her tax return a few months later. Mothers of January-born children must wait more than a year before receiving child-related tax benefits. Thus, families with December births have higher after-tax income in the first year of a child's life than otherwise similar families with January births. This paper estimates the corresponding income effect on maternal labor supply. December mothers have a lower probability of working, particularly in the third month after a child's birth, and we find some evidence that child-related tax benefits reduce maternal earnings.

The federal government delivers substantial college aid through the tax code. The designs of the Lifetime Learning tax credit and the tuition deduction may make them particularly useful to older students. This paper investigates how these provisions affect college attendance of individuals in their 30s and 40s. Using panel data and fixed effects instrumental variable estimation, I find no effect on adult college attendance or degree completion. There is a positive effect on college attendance among a subsample, those whose 1998 educational attainment fell short of earlier expectations. Overall, these results suggest that tax-based aid subsidizes inframarginal college attendance among adults.

The EITC subsidizes earnings from both wages and self-employment. This paper uses tax return data to investigate how the EITC affects the reporting of self-employment income to the 1RS. A difference-in-difference strategy is used, considering three EITC expansions and comparing filers with and without children. Expansions are predicted to increase the reporting of self-employment income in the phase-in region and to reduce it in the phase-out region. Among the lowest-income filers, the 1994 expansion is associated with a significant increase in the probability of reporting positive self-employment income, equal to 3.2 percentage points for unmarried filers and 4.1 percentage points for married filers.