Income Effects on Maternal Labor Supply: Evidence From Child-Related Tax Benefits

Wingender, Philippe; LaLumia, Sara

doi:10.17310/ntj.2017.1.01

Cited by 14 publications

(11 citation statements)

References 39 publications

(48 reference statements)

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“…However, as these income effects also apply to women having their second or third child, I leverage a diff-in-disc approach to separate the income and knowledge effects. 9 In doing so, I show that the income effects are generally negative and significant, consistent with Wingender and LaLumia (2017), but the women having their first child respond in a different manner. The unmarried women, especially the low-ed women, respond positively to this information effect, whereas the married women have a more negative response.…”

Section: Introductionmentioning

confidence: 80%

“…Another factor in this direction is a mother's increased value of time, driving up her reservation wage (Klerman and Leibowitz, 1994), from her desire to be with her child. Wingender and LaLumia (2017) provide evidence of these negative income effects with a similar identification strategy to mine, assigning differences in after-tax incomes calculated from NBER TAXSIM to mothers giving birth around the end of the tax year. Another advantage of their data set is the availability date of birth in the restricted-access American Community Survey, whereas my publicly available SIPP provides only month of birth.…”

Section: Introductionmentioning

confidence: 99%

“…At the surface, their findings and mine may seem to contradict one another, but I believe they are complementary as this paper focuses on a specific group of women, i.e., first-time mothers. As previously discussed, first-time mothers are exposed to both the income and information effects whereas Wingender and LaLumia (2017) focus solely on the income effects, which apply to having any child. My empirical strategy also isolates the effects of the refundable EITC from other non-refundable benefits associated with a December birth.…”

Section: Introductionmentioning

confidence: 99%

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First-time mothers and the labor market effects of the earned income tax credit

Shirley

2020

IZA Journal of Labor Policy

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The Earned Income Tax Credit (EITC) is one of the largest anti-poverty programs in the United States, providing over $67 billion to more than 27 million families for the tax year 2016, an average of $2,455. By subsidizing the earnings of low-income workers, the EITC reduces poverty both directly through the credit itself and indirectly through labor supply incentives. The two primary determinants of the amount a tax unit receives are earned income and number of children. Many studies define eligibility based on the presence of children in a household and separate analyses by marital status, a reflection of the fundamentally different incentives the EITC poses for single- and dual-earner households. However, as the EITC theoretically encourages fertility and generally discourages marriage, endogenous responses along these two dimensions could bias estimates which rely on them for identification and sample selection. In this paper, I revisit the classic question of the EITC’s labor market effects while exploiting a source of arguably exogenous variation in EITC receipt that does not rely on these potentially endogenous characteristics: birth timing around the end of the calendar year. Using the Survey of Income and Program Participation, my results show positive earnings and employment effects for unmarried women in the 12 months following their first/only child’s birth, including for those with a high school degree or less (low-ed). Overall, the results are usually small and insignificant for married women, with the exception of negative (and sometimes significant) effects on earnings for low-ed married women. Using a difference-in-discontinuities approach, I separate the income effect of the credit itself from the information effect, which, I argue, occurs when women receive the EITC for the first time. I show that, while the income effect is negative across all groups of women, the information effects are positive for unmarried women and negative for married women, again consistent with theory and the body of evidence on the EITC.

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Section: Introductionmentioning

confidence: 80%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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First-time mothers and the labor market effects of the earned income tax credit

Shirley

2020

IZA Journal of Labor Policy

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“…It is worth noting that these estimates may be biased due to the fact that we are conditioning on a post-treatment outcome (employment), although, as discussed above, we do not find statistically significant effects on the overall likelihood of employment. 40 On the whole, the evidence on post-leave labor market outcomes is inconsistent with an income effect channel (which would reduce maternal labor supply; see Wingender & LaLumia, 2017). Instead, these results suggest that higher pay during leave might improve employee morale and possibly promotes firm loyalty, such that a mother is more likely to return to her pre-leave firm rather than search for a new employer.…”

Section: No Covariates Covariatesmentioning

confidence: 99%

The Impacts of Paid Family Leave Benefits: Regression Kink Evidence from California Administrative Data

Bana¹,

Bedard²,

Rossin‐Slater³

2020

J Policy Anal Manage

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We use 10 years of California administrative data with a regression kink design to estimate the causal impacts of benefits in the first state-level paid family leave program for women with earnings near the maximum benefit threshold. We find no evidence that a higher weekly benefit amount (WBA) increases leave duration or leads to adverse future labor market outcomes for this group. In contrast, we document that a rise in the WBA leads to an increased likelihood of returning to the pre-leave firm (conditional on any employment) and of making a subsequent paid family leave claim.

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“…While we discuss the EITC later in this chapter, the labor supply effects of child-related tax credits are less studied. Wingender and Lalumia (2017) compare women giving birth in December to those giving birth in January and show that the added income due to the child-related tax credits that the December mothers receive relative to the January mothers leads to reductions in their labor supply. Related, Averett, Peters, and Waldman (1997) study the (nonrefundable) Child Care Tax Credit (CCTC), which reduces the tax burden of families with dependent care expenses.…”

Section: Taxes and Women's Labor Supplymentioning

confidence: 99%

Taxes, Transfers, and Women’s Labor Supply in the United States

Guldi

Schmidt

2017

The Oxford Handbook of Women and the Economy

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The US tax and transfer system generates revenue and provides safety net programs that move millions out of poverty. Since women are more likely to live in poverty, they are more likely to qualify for means-tested transfers. The structure of taxation in the United States often penalizes secondary earners, who are usually women. These programs alter work incentives and consequently may affect labor supply decisions. In this chapter, we examine the empirical evidence on the effects of taxes and transfers on the labor supply of women in the United States. We show that much has changed since 1990, with the biggest shift being a change from cash transfers via welfare to refundable tax credits to workers. Overall, the evidence we review shows women have higher labor force participation and are less responsive to changes in after-tax wages than they were before 1990, but the labor supply effects vary substantially by program considered.

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Income Effects on Maternal Labor Supply: Evidence From Child-Related Tax Benefits

Cited by 14 publications

References 39 publications

First-time mothers and the labor market effects of the earned income tax credit

First-time mothers and the labor market effects of the earned income tax credit

The Impacts of Paid Family Leave Benefits: Regression Kink Evidence from California Administrative Data

Taxes, Transfers, and Women’s Labor Supply in the United States

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