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KMID : 1001320200470030063
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Social Welfare Policy
2020 Volume.47 No. 3 p.63 ~ p.95
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The Effects of the Earned Income Tax Credit on both Labor Supply, Income and Poverty among Women in Korea - Focusing on Characteristics of Household -
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Noh Hye-Jin
Lee Ji-Eun
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Abstract
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This study examines the effects of the earned income tax credit(EITC) on labor supply, income, and poverty among women according to the composition of households. Using Korea Welfare Panel Study (KoWePS) data, six groups were formed with three axes: status in the household (the head of household and a member of the household), whether they work together, and whether or not they have children. The effects of EITC on each group were analyzed using propensity scores in difference-in-differences(DID).
The results of the evaluation showed that the EITC had a positive effect on the labor force participation of women compared to otherwise-similar women who did not benefit. However, it was found that the head of household or women who did not have children under the age of 18 had negative impacts on labor supply. Second, we find that the EITC had insignificant effect on increasing women’ earned income. Third, the EITC contributed to alleviating the poverty rate regardless of status in the family or household composition, especially women in single-earner family. Based on the findings, this paper sheds light on the increase in the credit for women in the dual-earner family, and the EITC reform of benefit unit from household to individual.
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KEYWORD
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Earned Income Tax Credit(EITC), Labor Supply Effects, Women’s Poverty, Propensity Score Matching(PSM), Difference-in-Differences
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