EITC Expansions, Earnings Growth, and Inequality: Evidence from Washington, DC

Free and open to the public - pizza lunch provided

About the Lecture:
We use longitudinal administrative tax data from Washington DC (DC) to study how Earned Income Tax Credit (EITC) expansions undertaken by the Washington DC affect income and inequality in the city. We find that federal and DC EITC credit expansions between 2001 and 2009 are associated with recipient pre-tax earnings growth of roughly 3-4 percent, primarily among single mothers. Together these credits reduce post-tax inequality for the 10th percentile relative to median household, however, composition changes in the city and growing overall inequality mitigates this inequality decrease towards the end of the period. Overall, these results complement existing research that shows the EITC has a positive effect on labor market outcomes and household well-being.

Professor Hardy is an Associate Professor of Public Administration and Policy and nonresident senior fellow in Economic Studies at the Brookings Institution. Currently, he is on leave from AU as a visiting scholar at the Russell Sage Foundation. He also serves as a visiting scholar with the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. His research interests lie within labor economics, with an emphasis on economic instability, intergenerational mobility, poverty policy, and socio-economic outcomes. He examines trends and sources of income volatility and intergenerational mobility within the United States, with a focus on socio-economically disadvantaged families, and also conducts research on the role of anti-poverty transfer programs such as SNAP food stamps and the earned income tax credit for improving economic well-being among low-income individuals and families. Before joining American, he served as a research fellow at the University of Kentucky Center for Poverty Research. Prior to his doctoral studies, Hardy helped provide analyses of U.S. budget, tax, and income support policies as a researcher at the Center on Budget and Policy Priorities in Washington, DC. He currently serves on the executive board of the Society of Government Economists, and the editorial boards of the Journal of Policy Analysis and Management and the Review of Black Political Economy. He is an elected member of the National Academy of Social Insurance.

Sponsored by:  University of Michigan Center for Local, State, and Urban Policy (CLOSUP)
Co-sponsored by:  Poverty Solutions

For more information visit www.closup.umich.edu or call 734-647-4091. Follow on Twitter @closup

• Brookings Institution
• EITC
• Earned Income Tax Credit
• anti-urban poverty
• Bradley Hardy