The Earned Income Tax Credit (EITC) and Time Spent Helping and Caring for Adults

Abstract

This is the first study to examine the effect of the Earned Income Tax Credit (EITC) on unpaid caregiving for adults, which could operate through the credit’s effects on labor supply and household income. Using a sample of unmarried mothers and data from the American Time Use Survey (ATUS), I employ a simulated instrument approach to generate causal estimates of the effect of EITC generosity on time use. I find that increases in average EITC benefits have differential effects on caregiving by recipient age. No effect is estimated for the youngest group of unmarried mothers (ages 25–34), who increase employment without reducing time spent assisting adults. In contrast, the oldest group of unmarried mothers (ages 45–54) responds by increasing their propensity to help their parents while maintaining their labor supply. Unmarried mothers aged 35–44 both increase their labor supply and spend more time caregiving for adult family members on the intensive margin, even as they are less likely to assist parents on the extensive margin, especially with chore help. Results for other types of time use (home production, leisure, childcare, education, sleep), as well as probability of multigenerational co-residence, help explain these shifts. For example, for the oldest group of unmarried mothers, increased co-residence with one’s aging parents is estimated to occur and may facilitate this labor-caregiving balance. These results add to a growing body of evidence that the EITC affects recipients’ time allocation beyond paid work and that the effects of the EITC span across generations and households.