Income tax plus employee contributions, 2020: As % of gross wage earnings, by household type and wage level

2021 ◽  
Keyword(s):  
Income Tax ◽  
Wage Level ◽  
Household Type ◽  
Wage Earnings

scholarly journals Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings

2013 ◽  
Vol 103 (7) ◽  
pp. 2683-2721 ◽  
Author(s):  
Raj Chetty ◽  
John N Friedman ◽  
Emmanuel Saez
Keyword(s):  
Labor Supply ◽  
Income Tax ◽  
Local Variation ◽  
Tax Credit ◽  
Intensive Margin ◽  
Earned Income ◽  
Self Employment ◽  
High Knowledge ◽  
Wage Earnings ◽  
Zip Code

We estimate the impacts of the Earned Income Tax Credit on labor supply using local variation in knowledge about the EITC schedule. We proxy for EITC knowledge in a Zip code with the fraction of individuals who manipulate reported self-employment income to maximize their EITC refund. This measure varies significantly across areas. We exploit changes in EITC eligibility at the birth of a child to estimate labor supply effects. Individuals in high-knowledge areas change wage earnings sharply to obtain larger EITC refunds relative to those in low-knowledge areas. These responses come primarily from intensive-margin earnings increases in the phase-in region. (JEL H23, H24, H31, J22, J23, J31)

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