The Earned Income Tax Credit (EITC) is a program that was set in place, in 1975, to improve “the

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The Earned Income Tax Credit (EITC) is a program that was set in place, in 1975, to improve “the economic status of low-income persons […] granting nearly $40 billion to low-income households” (Borjas, 59). As is clear from the name of the program, The EITC is a program that provides tax credits to those who qualify, the EITC could even produce a negative tax liability for some households, in particular the type I will discuss, which would provide substantial income increases for these households. In order to qualify for the EITC, the recipients must be active members of the labor force, in that they must have labor income, and for the group that I will be focusing on, single mothers, total household income must be below $33,241 for single…show more content…
I will look at the performance of the Earned Income Tax Credit, in terms of its ability to increase the labor supply of single-mothers, as well as any complications that may arise from the EITC program. (Athreya, 2012) The benefits of the Earned Income Tax Credit for single-mothers have been outlined by numerous studies written by renowned Economists, such as Bruce D. Meyer and Dan T. Rosenbaum of the University of Chicago and the University of North Carolina at Greensburg respectively. The article by Meyer and Rosenbaum, Welfare, The Earned Income Tax Credit, and The Labor Supply of Single Mothers, contains the data and statistics that I will use as the basis of my analysis and where I will draw the bulk of my conclusions on the benefits and drawbacks of the Earned Income Tax Credit on the labor supply of single-mothers. Meyer’s and Rosenbaum’s research is extremely significant to the particular topic that I am outlining as it uses data collected from a well-known survey and furthermore, looks specifically at the groups that are of particular interest of my research. Meyer and Rosenbaum collected their data from the Current Population Surveys (CPS) from 1984 to 1996. Once the data was collected the relevant data was extracted, namely the data corresponding to single-women ages 19 to

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