Business Intelligence

Stepping Stone Or Dead End? The Effect Of The EITC On Earnings Growth

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Executive Summary

While many studies have found that the EITC increases the employment rates of single mothers, no study to date has examined whether the jobs taken by single mothers as a result of the EITC incentives are "Dead-end" jobs or jobs that have the potential for earnings growth. Using a panel of administrative earnings data linked to nationally representative survey data, the authors find no evidence that the EITC expansions between 1994 and 1996 induced single mothers to take "Dead-end" jobs. If anything, the increase in earnings growth during the mid-to-late 1990s for single mothers who were particularly affected by the EITC expansion was higher than it was for other similar women.

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