Impacts of the Earned Income Tax Credit on Intergenerational Health Mobility

Intergenerational mobility measures equality of opportunity – a vision embraced by many Americans. It quantifies the welfare of children relative to their parents. In the United States, research identifies intergenerational persistence (the converse of mobility) in health and socioeconomic status that varies by race/ethnicity and place – a clear departure from the ideal of equal opportunities.

Childhood access to safety-net programs and public policies may improve later-life health and economic opportunities. However, it is unknown whether the Earned Income Tax Credit (EITC), the largest and possibly most effective anti-poverty program in the United States, affects equality of opportunity. EITC is a tax credit for low-income working families to supplement incomes, encourage work, and reduce tax burdens. Childhood EITC exposure has been shown to improve educational and labor market outcomes in adulthood.

Using 5,000 children matched with low-education parents in the Panel Study of Income Dynamics, this project estimates the effect of childhood exposure to the EITC on key measures of opportunity, leveraging variation in federal and state EITC policies over time. The EITC is, and has been, actively changing at the federal- and state-level since its inception in 1975 – providing extensive exogenous variation to gauge its effect on equality of health opportunity. Because opportunity is patterned by race/ethnicity, the study team will also examine whether and how the EITC disproportionately affects disadvantaged groups. This study will be the first to identify effects of early-life EITC exposure on intergenerational health mobility. Results from the research could provide actionable pathways for federal and state policymakers evaluating EITC costs and benefits to effectively reduce inequities in opportunity. The project will spur continued research on the interaction between public policies and health inequality.

PRINCIPAL INVESTIGATOR

Yang Wang,  associate professor of public affairs at the La Follette School of Public Affairs

CO-PRINCIPAL INVESTIGATOR

Katie Jajtner, assistant scientist for the Center for Demography of Health and Aging