This paper revisits the evidence on the intergenerational effects of the Earned Income Tax Credit on the adult income of individuals who received the tax credit during childhood. Identification exploits cross state and yearly variation from formulaic changes in new multigenerational data. The results show that tax credit transfers during early childhood increase adult income by 1.5-3.4 percent per $1,000. Contrary to previous studies, the critical timing of the EITC is during early childhood instead of adolescence. The intergenerational impact of the tax credit is driven by children of mothers working the fewest hours, suggesting that work conditions offset intergenerational poverty alleviation.
The full working paper is available here.
