The Relationship Between Parental Receipt of the Earned Income Tax Credit and Children's High School Dropout Status
Savidge-Wilkins, Galen G.
Thomas, Adam T
The Earned Income Tax Credit was established to provide low-income families with relief from the payroll tax, but it has grown over time to become the largest means tested cash transfer program and one of the most substantial federal supports for the working poor. While the EITC has been studied extensively, the literature has largely focused on its ability to encourage work, particularly among mothers. (Eissa and Liebman 1996, Eissa and Hoynes 1998, Meyer and Rossenbaum 2000) There is a growing research literature on other effects of the EITC, including its impact on child cognitive ability and maternal health. (Dahl and Lochner 2011, Evans and Garthwaite 2011) However, there is little research into how this component of the safety net impacts a key outcome for children, high school graduation. Using data from the National Longitudinal Survey of Youth on mothers and their children to construct a rich personal history for each child, I examine the relationship between parental receipt of the Earned Income Tax Credit and children's likelihood of graduating from high school on time. Within my sample, EITC receipt is found to be most strongly associated with on-time graduation when these benefits are received during two life stages: before the children enter school and when children are in middle school. My results indicate that a $1,000 increase in average yearly real EITC receipt before the children enter school is associated with a 6.80 percentage point increase in the likelihood of finishing high school on-time, and 1.56 percentage point improvement when that same increase in average real EITC receipt occurs during middle school. Analyses of specific disadvantaged subgroups yield statistically significant results during the same life stages and a stronger positive relationship between EITC receipt and high school graduation for those children.
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TAX POLICY AND INTERGENERATIONAL POVERTY: THE RELATIONSHIP BETWEEN THE EARNED INCOME TAX CREDIT AND YOUNG ADULT EARNINGS Dancy, Kimberly Beth (Georgetown University, 2013)The Earned Income Tax Credit (EITC) is a refundable tax credit, originally developed in 1975, which functions as a wage subsidy for low-income families and single adults. The EITC has demonstrated effects on familial ...