<p>I estimate that the implementation of state-level Earned Income Tax Credit (EITC) supplements results in a 3% reduction in the likelihood of downward occupational mobility among single mothers aged 19 to 35. This outcome, characterized by an elasticity of <InlineEquation ID="IEq1"> <EquationSource Format="TEX">\(-\)</EquationSource> <EquationSource Format="MATHML"><math> <mo>-</mo> </math></EquationSource> </InlineEquation>1.4, is not attributable to shifts in occupational distribution, wage changes, variations in workforce participation, or alterations in working hours. Rather, it aligns with the EITC’s enhanced compensation for mid-wage occupations, which diminishes the incentive for workers to transition into lower-wage roles. This evidence suggests that the EITC may exert a lasting effect on the skill development of employed workers, beyond its immediate financial benefits.</p>

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The EITC and occupational mobility

  • Andrew Yizhou Liu

摘要

I estimate that the implementation of state-level Earned Income Tax Credit (EITC) supplements results in a 3% reduction in the likelihood of downward occupational mobility among single mothers aged 19 to 35. This outcome, characterized by an elasticity of \(-\) - 1.4, is not attributable to shifts in occupational distribution, wage changes, variations in workforce participation, or alterations in working hours. Rather, it aligns with the EITC’s enhanced compensation for mid-wage occupations, which diminishes the incentive for workers to transition into lower-wage roles. This evidence suggests that the EITC may exert a lasting effect on the skill development of employed workers, beyond its immediate financial benefits.