The long-term effect of the Earned Income Tax Credit on women's physical and mental health
Lauren E. Jones
Department of Human Sciences and John Glenn College of Public Affairs, The Ohio State University, Columbus, Ohio, USA
Search for more papers by this authorGuangyi Wang
Social Policies for Health Equity Research Program (SPHERE), Philip R. Lee Institute for Health Policy Studies, University of California San Francisco, San Francisco, California, USA
Search for more papers by this authorCorresponding Author
Tansel Yilmazer
Department of Human Sciences, The Ohio State University, Columbus, Ohio, USA
Correspondence
Tansel Yilmazer, Department of Human Sciences, The Ohio State University, Columbus, OH, USA.
Email: [email protected]
Search for more papers by this authorLauren E. Jones
Department of Human Sciences and John Glenn College of Public Affairs, The Ohio State University, Columbus, Ohio, USA
Search for more papers by this authorGuangyi Wang
Social Policies for Health Equity Research Program (SPHERE), Philip R. Lee Institute for Health Policy Studies, University of California San Francisco, San Francisco, California, USA
Search for more papers by this authorCorresponding Author
Tansel Yilmazer
Department of Human Sciences, The Ohio State University, Columbus, Ohio, USA
Correspondence
Tansel Yilmazer, Department of Human Sciences, The Ohio State University, Columbus, OH, USA.
Email: [email protected]
Search for more papers by this authorAbstract
Using a novel method, and data from the National Longitudinal Survey of Youth 1979 (NLSY79), we estimate the cumulative, long-term, causal effect of Earned Income Tax Credit (EITC) eligibility on women's physical and mental health at age 50. We find that an increase in lifetime eligible EITC benefits is associated with long-term improvements in physical health, such as reduced occurrence of activity-limiting health problems and reduced reported diagnoses of mild and severe diseases. We explore intermediate health behaviors and outcomes, and find that an increase in lifetime eligible EITC benefits increases the number of hours worked and access to employer-sponsored health insurance, and decreases body mass index in the short-term. We find no significant effects of the EITC on mental health at age 50. Finally, we find that White women benefit disproportionately from the EITC in terms of mobility-related health issues, while Black and Hispanic women benefit in terms of lung-related illnesses like asthma, as well as cancer and stroke.
CONFLICT OF INTEREST
The authors have no relevant or material financial interests that relate to the research described. All remaining errors are our own.
Open Research
DATA AVAILABILITY STATEMENT
The agreement between Ohio State University and BLS prevents the researchers from sharing restricted-access NLSY79 data.
REFERENCES
- Ahn, T. (2016). Reduction of working time: Does it lead to A healthy lifestyle? Health Economics, 25(8), 969–983. https://doi.org/10.1002/hec.3198
- Aizer, A., Eli, S., Joseph, F., & Lleras-Muney, A. (2016). The long-run impact of cash transfers to poor families. The American Economic Review, 106(4), 935–971. https://doi.org/10.1257/aer.20140529
- Apouey, B., & Clark, A. E. (2015). Winning big but feeling No better? The effect of lottery prizes on physical and mental health. Health Economics, 24(5), 516–538. https://doi.org/10.1002/hec.3035
- Averett, S., & Wang, Y. (2013). The effects of earned income tax credit payment expansion on maternal smoking. Health Economics, 22(11), 1344–1359. https://doi.org/10.1002/hec.2886
- Bastian, J. (2020). The rise of working mothers and the 1975 earned income tax credit. American Economic Journal: Economic Policy, 12(3), 44–75. https://doi.org/10.1257/pol.20180039
- Bastian, J., & Michelmore, K. (2018). The long-term impact of the earned income tax credit on children’s education and employment outcomes. Journal of Labor Economics, 36(4), 1127–1163. https://doi.org/10.1086/697477
- Baughman, R., & Dickert-Conlin, S. (2009). The earned income tax credit and fertility. Journal of Population Economics, 22(3), 537–563. https://doi.org/10.1007/s00148-007-0177-0
- Baughman, R. A. (2005). Evaluating the impact of the earned income tax credit on health insurance coverage. National Tax Journal, 58(4), 665–684. https://doi.org/10.17310/ntj.2005.4.03
- Berniell, M. I., & Bietenbeck, J. (2017). The effect of working hours on health. IZA Discussion Papers No. 10524.
10.2139/ssrn.2911462 Google Scholar
- Bitler, M., & Figinski, T. F. (2019). Long-run effects of food assistance: Evidence from the food Stamp program. Economic Self-Sufficiency Policy Research Institute. Working Paper 20195.
- Boyd-Swan, C., Herbst, C. M., Ifcher, J., & Zarghamee, H. (2016). The earned income tax credit, mental health, and happiness. Journal of Economic Behavior & Organization, 126, 18–38. https://doi.org/10.1016/j.jebo.2015.11.004
- Brown-Robertson, LaT., Casey, M., Bradley, H., & Muhammad, D. (2016). Does the EITC buffer against neighborhood transition? Evidence from Washington D.C. American Economic Review Papers and Proceedings, 106(5), 360–362. https://doi.org/10.1257/aer.p20161117
- Cahyadi, N., Hanna, R., Olken, B. A., Prima, R. A., Satriawan, E., & Syamsulhakim, E. (2020). Cumulative impacts of conditional cash transfer programs: Experimental evidence from Indonesia. American Economic Journal: Economic Policy, 12(4), 88–110. https://doi.org/10.1257/pol.20190245
- Cancian, M., & Levinson, A. (2006). Labor supply effects of the earned income tax credit: Evidence from Wisconsin supplemental benefit for families with three children. National Tax Journal, 59(4), 781–800. https://doi.org/10.17310/ntj.2006.4.02
- Cesarini, D., Lindqvist, E., Östling, R., & Wallace, B. (2016). Wealth, health, and child development: Evidence from administrative data on Swedish lottery players. Quarterly Journal of Economics, 131(2), 687–738. https://doi.org/10.1093/qje/qjw001
- Cole, J. C., Adele, S. R., Smith, T. L., & Kaufman, A. S. (2004). Development and validation of a rasch-derived CES-D short form. Psychological Assessment, 16(4), 360–372. https://doi.org/10.1037/1040-3590.16.4.360
- Collin, D. F., Shields-Zeeman, L. S., Batra, A., Vable, A. M., Rehkopf, D. H., Machen, L., & Hamad, R. (2020). Short-term effects of the earned income tax credit on mental health and health behaviors. Preventive Medicine, 139, 106223. https://doi.org/10.1016/j.ypmed.2020.106223
- Collin, D. F., Shields-Zeeman, L. S., Batra, A., White, J. S., Tong, M., & Hamad, R. (2021). The effects of state earned income tax credits on mental health and health behaviors: A quasi-experimental study. Social Science & Medicine, 276, 113274. https://doi.org/10.1016/j.socscimed.2020.113274
- Currie, J., & Gruber, J. (1996). Saving babies: The efficacy and costs of recent changes in the Medicaid eligibility of pregnant women. Journal of Political Economy, 104(6), 1263–1296. https://doi.org/10.1086/262059
- Cygan-Rehm, K., & Wunder, C. (2018). Do working hours affect health? Evidence from statutory workweek regulations in Germany. Labor Economics, 53, 162–171. https://doi.org/10.1016/j.labeco.2018.05.003
- Dahl, G. B., & Lochner, L. (2012). The impact of family income on child achievement: Evidence from the earned income tax credit. The American Economic Review, 102(5), 1927–1956. https://doi.org/10.1257/aer.102.5.1927
- Dahl, G. B., & Lochner, L. (2017). The impact of family income on child achievement: Evidence from the earned income tax credit: Reply. The American Economic Review, 107(2), 629–631. https://doi.org/10.1257/aer.20161329
- Dow, W. H., Anna, G., Lowenstein, C., & Reich, M. (2020). Can labor market policies reduce deaths of despair? Journal of Health Economics, 74, 102372. https://doi.org/10.1016/j.jhealeco.2020.102372
- Dowd, T., & Horowitz, J. B. (2011). Income mobility and the earned income tax credit: Short-term safety net or long-term income support. Public Finance Review, 39(5), 432–436. https://doi.org/10.1177/1091142111401008
10.1177/1091142111401008 Google Scholar
- Eissa, N., & Hoynes, H. (2006). The hours of work response of married couples: Taxes and the earned income tax credit. In Tax policy and labor market performance (pp. 187–228).
- Eissa, N., & Liebman, J. B. (1996). Labor supply response to the earned income tax credit. Quarterly Journal of Economics, 111(2), 605–637. https://doi.org/10.2307/2946689
- Evans, W. N., & Garthwaite, C. L. (2014). Giving mom a break: The impact of higher EITC payments on maternal health. American Economic Journal: Economic Policy, 6(2), 258–290. https://doi.org/10.1257/pol.6.2.258
- Farivar, S. S., Cunningham, W. E., & Hays, R. D. (2007). Correlated physical and mental health summary scores for the SF-36 and SF-12 health survey, V. 1. Health and Quality of Life Outcomes, 5(1), 54. https://doi.org/10.1186/1477-7525-5-54
- Frijters, P., Haisken-DeNew, J. P., & Shields, M. A. (2005). The causal effect of income on health: Evidence from German Reunification. Journal of Health Economics, 24(5), 997–1017. https://doi.org/10.1016/j.jhealeco.2005.01.004
- Gavrilă, B. I., Ciofu, C., & Stoica, V. (2016). Biomarkers in rheumatoid arthritis, what is new? Journal of Medicine and Life, 9(2), 144–148.
- Gelber, A. M., & Mitchell, J. W. (2011). Taxes and time allocation: Evidence from single women and men. The Review of Economic Studies, 79(3), 863–897. https://doi.org/10.1093/restud/rdr041
- Gold, R. B., Singh, S., & Frost, J. (1993). The Medicaid eligibility expansions for pregnant women: Evaluating the strength of state implementation efforts. Family Planning Perspectives, 25(5), 196–207. https://doi.org/10.2307/2136072
- Goodman-Bacon, A., & McGranahan, L. (2008). How do EITC recipients spend their refunds? Economic Perspectives, 32(2). Retrieved from https://www.chicagofed.org/publications/economic-perspectives/2008/2qtr2008-part2-goodman-etal
- Grundy, E., & Kravdal, Ø. (2014). Do short birth intervals have long-term implications for parental health? Results from analyses of complete cohort Norwegian register data. Journal of Epidemiology & Community Health, 68(10), 958–964. https://doi.org/10.1136/jech-2014-204191
- Halpern-Meekin, S., Edin, K., Tach, L., & Sykes, J. (2015). It’s not like I’m poor: How working families make ends meet in a post-welfare world. University of California Press.
10.1525/9780520959224 Google Scholar
- Hill, I. T. (1990). Improving state Medicaid programs for pregnant women and children. Health Care Financing Review, 11, 75–88.
- Hotz, V. J., & Scholz, J. K. (2006). Examining the effect of the earned income tax credit on the labor market participation of families on welfare. National Bureau of Economic Research. No. w11968.
10.3386/w11968 Google Scholar
- Hoynes, H., Miller, D., & Simon, D. (2015). Income, the earned income tax credit, and infant health. American Economic Journal: Economic Policy, 7(1), 172–211. https://doi.org/10.1257/pol.20120179
- Hoynes, H. W., & Patel, A. J. (2018). Effective policy for reducing inequality? The earned income tax credit and the distribution of income. Journal of Human Resources, 53(4), 859–890. https://doi.org/10.3368/jhr.53.4.1115.7494r1
- Hoynes, H., Whitmore Schanzenbach, D., & Douglas, A. (2016). Long-run impacts of childhood access to the safety net. The American Economic Review, 106(4), 903–934. https://doi.org/10.1257/aer.20130375
- Institute of Medicine and National Research Council. (2013). Supplemental nutrition assistance program: Examining the evidence to define benefit adequacy. The National Academies Press.
- Internal Revenue Service. (2018). EITC awareness day. Retrieved November 24, 2020 from https://www.eitc.irs.gov/partner-toolkit/eitc-awareness-day/eitc-awareness-day-2
- Internal Revenue Service. (2019). Statistics for tax returns with EITC. Retrieved November 24, 2020 from https://www.eitc.irs.gov/eitc-central/statistics-for-tax-returns-with-eitc/statistics-for-2018-tax-returns-with-eitc
- Jenkinson, C., Layte, R., Jenkinson, D., Lawrence, K., Petersen, S., Paice, C., & Stradling, J. (1997). A shorter form health survey: Can the sf-12 replicate results from the sf-36 in longitudinal studies? Journal of Public Health, 19(2), 179–186. https://doi.org/10.1093/oxfordjournals.pubmed.a024606
- Jones, L. E., & Michelmore, K. (2018). The impact of the earned income tax credit on household finances. Journal of Policy Analysis and Management, 37(3), 521–545. https://doi.org/10.1002/pam.22062
- Jones, L. E., & Michelmore, K. (2019). Timing is money: Does lump-sum payment of the earned income tax credit affect savings and debt? Economic Inquiry, 57(3), 1659–1674. https://doi.org/10.1111/ecin.12788
- Kenkel, D. S., Schmeiser, M. D., & Urban, C. (2014). Is smoking inferior? Evidence from variation in the earned income tax credit. Journal of Human Resources, 49(4), 1094–1120. https://doi.org/10.3386/w20097
- Kleven, H. (2019). The EITC and the extensive margin: A reappraisal (p. w26405). National Bureau of Economic Research.
- Lakdawalla, D., & Philipson, T. (2007). Labor supply and weight. Journal of Human Resources, 42(1), 85–116. https://doi.org/10.3368/jhr.xlii.1.85
- Larrimore, J. (2011). Does a higher income have positive health effects? Using the earned income tax credit to explore the income-health gradient. The Milbank Quarterly, 89(4), 694–727. https://doi.org/10.1111/j.1468-0009.2011.00647.x
- Lenhart, O. (2019a). The effects of state-level earned income tax credits on suicides. Health Economics, 28(12), 1476–1482. https://doi.org/10.1002/hec.3948
- Lenhart, O. (2019b). The effects of income on health: New evidence from the earned income tax credit. Review of Economics of the Household, 17(2), 377–410. https://doi.org/10.1007/s11150-018-9429-x
- Levine, S. Z. (2013). Evaluating the seven-item center for epidemiologic studies depression scale short-form: A longitudinal U.S. Community study. Social Psychiatry and Psychiatric Epidemiology, 48(9), 1519–1526. https://doi.org/10.1007/s00127-012-0650-2
- Looney, A., & Manoli, D. S. (2016). Are there returns to experience at low-skill jobs? Evidence from single mothers in the United States over the 1990s. Upjohn Institute. Working Paper No. 16–255.
10.17848/wp16-255 Google Scholar
- Markowitz, S., Komro, K. A., Livingston, M. D., Otto, L., & Wagenaar, A. C. (2017). Effects of state-level earned income tax credit laws in the U.S. On maternal health behaviors and infant health outcomes. Social Science & Medicine, 67–75. https://doi.org/10.3386/w23714
- McGranahan, L. (2016). Tax credits and the debt position of U.S. Households. Federal Reserve Bank of Chicago. Working Paper 2016-12. Retrieved from https://www.chicagofed.org/publications/working-papers/2016/wp2016-12
- McGranahan, L., & Whitmore Schanzenbach, D. (2013). The earned income tax credit and food consumption patterns. Federal Reserve Bank of Chicago. Working Paper 2013-14.
10.2139/ssrn.2366846 Google Scholar
- Meer, J., Miller, D. L., & Rosen, H. S. (2003). Exploring the health–wealth nexus. Journal of Health Economics, 22(5), 713–730. https://doi.org/10.3386/w9554
- Meyer, B. D., & Rosenbaum, D. T. (2001). Welfare, the earned income tax credit, and the labor supply of single mothers. Quarterly Journal of Economics, 116(3), 1063–1114. https://doi.org/10.1162/00335530152466313
- Narain, K., Bitler, M., Ponce, N., Kominski, G., & Ettner, S. (2017). The impact of welfare Reform on the health insurance coverage, utilization and health of low education single mothers. Social Science & Medicine, 180, 28–35. https://doi.org/10.1016/j.socscimed.2017.03.021
- Neumark, D., & Shirley, P. (2020). The long-run effects of the earned income tax credit on women’s earnings. Labour Economics, 66, 1011878.
- Nichols, A., & Rothstein, J. (2015). The earned income tax credit. Economics of Means-Tested Transfer Programs in the United States, 1, 137–218.
- Noonan, M. C., Smith, S. S., & Corcoran, M. E. (2007). Examining the impact of welfare Reform, labor market conditions, and the earned income tax credit on the employment of black and white single mothers. Social Science Research, 36(1), 95–130. https://doi.org/10.1016/j.ssresearch.2005.09.004
- Pilkauskas, N., & Michelmore, K. (2019). The effect of the earned income tax credit on housing and living arrangements. Demography, 56(4), 1–24. https://doi.org/10.1007/s13524-019-00791-5
- Radloff, L. S. (1977). The CES-D scale: A self-report depression scale for research in the general population. Applied Psychological Measurement, 1(3), 385–401. https://doi.org/10.1177/014662167700100306
10.1177/014662167700100306 Google Scholar
- Schmeiser, M. D. (2009). Expanding wallets and waistlines: The impact of family income on the BMI of women and men eligible for the earned income tax credit. Health Economics, 18(11), 1277–1294. https://doi.org/10.1002/hec.1430
- Shaffer, J. L. (2011). Healthy kids and strong working families: Improving economic security for north Dakota families with children. National Center for Children Poverty.
- Sironi, M., Ploubidis, G. B., & Grundy, E. M. (2020). Fertility history and biomarkers using prospective data: Evidence from the 1958 national child development study. Demography, 57(2), 529–558. https://doi.org/10.1007/s13524-020-00855-x
- University of Kentucky Center for Poverty Research. (2020). UKCPR national welfare data, 1980-2018. Retrieved November 24, 2020 from http://ukcpr.org/resources/national-welfare-data
- Ware, Jr, John, E., Kosinski, M., & Keller, S. D. (1996). A 12-item short-form health survey: Construction of scales and preliminary tests of reliability and validity. Medical Care, 34(3), 220–233. https://doi.org/10.1097/00005650-199603000-00003
- Wehby, G. L., Dave, D. M., & Kaestner, R. (2020). Effects of the minimum wage on infant health. Journal of Policy Analysis and Management, 39(2), 411–443. https://doi.org/10.1002/pam.22174
- Yaribeygi, H., Panahi, Y., Sahraei, H., Johnston, T. P., & Sahebkar, A. (2017). The impact of stress on body function: A review. EXCLI journal, 16, 1057.