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The interaction of metropolitan cost-of-living and the federal Earned Income Tax Credit: One size fits all?

Date Added to Library: 
Wednesday, September 5, 2012 - 15:04
Priority: 
normal
Individual Author: 
Fitzpatrick, Katie
Thompson, Jeffrey P.
Reference Type: 
Published Date: 
September 2010
Published Date (Text): 
September 2010
Publication: 
National Tax Journal
Volume: 
63
Issue Number: 
3
Page Range: 
419-445
Year: 
2010
Language(s): 
Abstract: 

This paper explores the interaction between the federal Earned Income Tax Credit (EITC) and the cost-of-living faced by single mothers. After the 1993 EITC expansion, we identify up to an 8 percentage point increase in labor force participation for single mothers in the lowest cost areas but no discernible response in the highest cost areas. We conclude that the EITC’s welfare-enhancing properties are undermined by the interaction of the program’s fixed national rules and geographic variation in wages and the cost-of-living. In addition, our findings suggest that the EITC does little to reduce joblessness in many of the nation’s largest cities. (author abstract)

Target Populations: 
Page Count: 
27
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