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

Harvard Dataverse (Africa Rice Center, Bioversity International, CCAFS, CIAT, IFPRI, IRRI and WorldFish)

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Title Earned Income Tax Credits and Labor Supply: New Evidence from a British Natural Experiment, National Tax Journal
 
Identifier https://doi.org/10.7910/DVN/6NDDKC
 
Creator Leigh, Andrew
 
Publisher Harvard Dataverse
 
Description 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 phase-out 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.
 
Date 2007