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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar. Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract Welfare programs are important for reducing poverty but create incentives for recipients to maximize their income by either reducing labor supply or manipulating taxable income. In this paper, we quantify the extent of such behavioral responses for the Earned Income Tax Credit (EITC) in the US. We exploit that US states can set top-up rates, which means that, at a given point in time, workers with the same income receive dierent tax refunds in dierent states. Using event studies as well as a border pair design, we document that a raise in the state-EITC leads to more bunching of self-employed tax lers at the rst kink point of the tax schedule. While we document a strong relationship up until the Great Recession in 2007, we nd no eect thereafter.

The United States changed its tax treatment of married couples in 1948, from a system in which each spouse paid taxes on his or her own income to a system in which a married couple is taxed as a unit. The switch from separate to joint taxation changed incentives for labor supply and asset ownership. This paper investigates the effects of the conversion to joint taxation, taking advantage of a natural experiment created by cross-state variation in property laws. Married individuals in states with community property laws had always been taxed as if each spouse had earned half of the couple's income, and thus were unaffected by the 1948 legal change. Comparing the behavior of taxpayers in affected and unaffected states indicates that the tax change is associated with a decline of 0.9-1.6 percentage points in the labor force participation rate of married women, consistent with the higher first-dollar tax rates they faced after 1948. Married women were also 0.6-1.9 percentage points less likely to have non-wage income after 1948, reflecting pre-1948 allocation of family assets to wives for tax purposes. The effects of joint taxation on married men's labor force participation and non-wage income holding are generally not statistically significant.

A mother giving birth in December can claim child-related tax benefits when she files her tax return a few months later. Mothers of January-born children must wait more than a year before receiving child-related tax benefits. Thus, families with December births have higher after-tax income in the first year of a child's life than otherwise similar families with January births. This paper estimates the corresponding income effect on maternal labor supply. December mothers have a lower probability of working, particularly in the third month after a child's birth, and we find some evidence that child-related tax benefits reduce maternal earnings.

The federal government delivers substantial college aid through the tax code, after introducing education tax credits in 1998 and a tuition deduction in 2002. The design of the Lifetime Learning tax credit and the tuition deduction may make them particularly useful to older students. This paper investigates how these provisions have affected college attendance of individuals in their 30s and 40s. For most adults, there is no effect on college attendance. Among men whose 1998 educational attainment falls short of earlylife educational expectations, eligibility for an education tax preference is associated with a 2.5 to 3.4 percentage point increase in the probability of college attendance.Starting in the late 1990s, the U.S. federal government has substantially expanded the amount of college aid it provides through the tax system. Two higher education tax credits, the Hope and Lifetime Learning tax credits, were introduced in 1998, and a tuition deduction was introduced in 2002. Many authors have pointed out that tax-based aid is targeted to a different group of students than is traditional federal college aid: While Pell grants are primarily for low-income individuals, tax-based aid tends to benefit the middle class. The possibility that tax-based college aid may be particularly useful to older students has been largely overlooked.In this paper I investigate the role of recent federal tax incentives for higher education on the college attendance decisions of adults in their 30s and 40s.The Hope tax credit is designed for those who fit the profile of a traditional college student.It is available only to students who are enrolled half-time or more in the first two years of an