Need to control for employment, also

Reader comment on: Earned Income Tax Credit

Submitted by Ann (United States), Jul 6, 2019 21:13

One of the goals of the EITC is to induce more people to work, including lower-skilled people that might not be able to find a job at all if the minimum wage is high.

Suppose the EITC successfully increased the labor supply, getting more marginal workers to take jobs rather than welfare or disability or black market alternatives. Granted, there may be less upward pressure on wages because of the higher supply, but the lower wage growth might also be due to the success of bringing in the least-skilled, most marginal workers who are likely to be paid less but wouldn't be working at all otherwise.

We can't judge these results without strong controls for changes in overall employment.


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