Policy Research

The Effects of the Earned Income Tax Credit on Childrens Health, Quality of Home Environment, and Non Cognitive Skills

Susan Averett, Yang Wang

Summary

The article examines the effects of the Earned Income Tax Credit on children’s health status in addition to their quality of household life and non-cognitive skills. This is accomplished by examining the changes that occurred during the significant 1993 increase of the EITC. The study finds that the tax credit has a significant positive effect on the health of unmarried black women’s children and married white and Hispanic women’s children. Additionally the tax credit can be associated with an increase in quality of home for unmarried white and Hispanic mother’s children. Finally accidents and injuries decreased in houses of married white and Hispanic mothers. The study attempts to explain the cause of these positive effects and concludes it may be due to increased income from parents, increased work time from parents, or a possible incentive to lead healthier lifestyles.

Read Now

Policy Implications

This article can be used in attempt to design, reform, or modify cash assistance programs such as the Earned Income Tax Credit. The results of the credit on children were relatively unstudied and therefore not previously considered in setting the rates of the credit. The positive effects discussed can be useful in creating a more accurate cost-benefit analysis.