State Earned Income Tax Credit, Minimum Wage Laws, and Health

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By affecting the availability of family resources, state and federal labor market support policies have the potential to have short- and long-term impacts on the health of both adults and children.

The study will conduct a comprehensive evaluation of the short- and long-term effects of labor market support policies, focusing on the earned income tax credit (EITC) and minimum wage policies during pregnancy and childhood on parental and child health outcomes. The empirical strategy will exploit multiple changes in federal and state EITC and minimum wage policies over the last several decades.

The researchers will use a difference in differences framework with comparison groups for estimating impacts with the specific estimation strategy depending on the policy we are investigating. The researchers will rely on the Panel Study of Income Dynamics (PSID) as the core data source for this analysis because it follows families over the period of significant change in state. Researchers will also explore cross-sectional data-sets, such as the Behavioral Risk Factor Surveillance System (BRFSS), which could provide us with more power for our analysis. These data-sets could be especially helpful when examining the long-term impacts of these policies when a child reaches adulthood, and for contemporaneous effects of the policy on the parents.

Evidence

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While Earned Income Tax Credit expansions are typically associated with improvements in maternal mental health, little is known about the mechanisms through which the program affects this outcome. Anuj Gangopadhyaya, Fredric Blavin, Jason Gates, and Breno Braga of the Urban Institute assess the impact of more than two decades of federal expansions in EITC credits and the implementation of state-specific EITC programs on maternal mental health in a new working paper.