Poster #125 - Unintended Consequences: Childless Workers, the EITC, and the Minimum Wage

• In Event: Friday Poster Reception

Abstract

This paper examines how state Earned Income Tax Credit (EITC) expansions for childless adults interact with state minimum wage increases. I use Current Population Survey data to provide new evidence on how minimum wage increases may have unintended consequences as childless workers are less likely to be eligible for the EITC when the minimum wage is higher. Specifically, I expect lower EITC eligibility rates among childless workers with incomes at or below $30,000. My preliminary findings suggest that, when the minimum wage increases, the eligible population both becomes smaller and shifts towards part-time workers. Thus, when the EITC for childless adults is expanded at the same time as the minimum wage is increased, redistributive effects are potentially more limited than policymakers likely intend. Because states with the most generous state EITCs for childless adults also tend to have higher minimum wages, their childless EITCs benefit a smaller population of childless adults. Additional analysis simulates federal and state EITC eligibility and credit amounts for this population under a set of more generous policy rules. These findings have important implications for the design and evaluation of anti-poverty policies that target low-income workers without children.

Author

• Christopher Wodicka, University of Pennsylvania
  Presenting Author