PERI - The Interaction of Metropolitan Cost-of-living & the Federal Earned Income Tax Credit: One Size Fits All?

by: Jeffrey P. Thompson, Katie Fitzpatrick

August 12, 2009 | Working Paper

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Type of publication: Working Paper
Research or In The Media: Research
Research Area: Labor Markets, Wages & Poverty
Publication Date: 2009-08-12
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Authors:
- Add Authors: Jeffrey P. Thompson
- Add Authors: Katie Fitzpatrick
Show in Front Page Modules: Yes
JEL Codes: H31

This paper explores the interaction between the federal Earned Income Tax Credit (EITC) and the cost-of-living faced by single mothers. After the 1993 EITC expansion, we identify up to a 10 percentage point increase in labor force participation for single mothers in the lowest cost areas but no discernable response in the highest cost areas. We conclude that the EITC