Fighting Poverty, Losing Time? The Earned Income Tax Credit and Time Poverty and Quality of Time

• In Event: Differential Implementation and Impacts of Policies to Combat Poverty and Food Insecurity

Abstract

Background and Purpose: Time is an essential resource for achieving well-being, providing both material and non-material benefits. However, time is inherently scarce, and individuals with limited discretionary time may experience “time poverty,” which can adversely affect health, well-being, and asset accumulation. How people allocate and manage their time also significantly impacts its quality. The Earned Income Tax Credit (EITC) is one of the largest anti-poverty programs in the U.S., offering refundable tax credits to low-income families, particularly those with children. While EITC’s impacts on employment, poverty reduction, health, and child outcomes have been extensively studied, little is known about its effects on time poverty and time quality. To our knowledge, this study is among the first to examine these effects comprehensively.

Methods: Using ATUS data (2003–2023), we restrict the sample to single mothers aged 18–59 without a bachelor’s degree, a group most likely affected by the policy. Absolute time poverty is measured when discretionary time is less than or equal to contracted time; relative time poverty is measured as free time being less than 50%, 60%, or 70% of the median in the sample. Time quality is assessed across four aspects. Proportion refers to the free-to-contracted-time ratio. Multitasking is captured by childcare multitasking time, defined as free time spent simultaneously caring for children. Fragmentation includes two indicators: frequency of free time segmentation, measured as the number of distinct free-time activities per day, and single free-time duration, measured as the average length of each free-time activity per day. Emotional feelings include perceived stress, measured as the daily average, and overall feelings, measured by a composite index combining four categories of free time experiences: negative, happy, happy-tired, and meaningless. We exploit variation in EITC generosity across states and years using a Difference-in-Differences design, controlling for individual, household, and state characteristics, as well as state and year fixed effects.

Results: A $500 increase in EITC generosity is associated with a 3.2% increase in absolute time poverty and 0.8%, 1.0%, and 1.1% increases in relative time poverty at the 50%, 60%, and 70% thresholds, respectively. EITC also leads to a 0.0025 decline in the free-to-contracted-time ratio, a 0.048 reduction in the daily frequency of free time segmentation, a 0.747-minute increase in single free-time activity duration, a 0.029-point rise in average perceived stress, and a 0.233-minute decrease in negative feelings. Childcare multitasking time shows no significant change.

Conclusions and Implications:  While the EITC promotes employment and overall economic well-being, it may simultaneously increase time poverty and partially reduce time quality. Some observed effects support our hypotheses, including reductions in free-to-contracted-time ratio and increases in single free-time duration and perceived stress. However, other outcomes, such as frequency of free time segmentation, negative feelings, and childcare multitasking time, do not support the hypotheses. These findings highlight the need to consider unintended consequences of EITC on individuals’ time use to fully understand the policy’s multidimensional impacts.

Authors

• Wan-Hsuan Chiang, National Taiwan University
  Presenting Author

• Julia Shu-Huah Wang, National Taiwan University
  Non-Presenting Co-Author