The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit
American Economic Review · 2012 · Volume 102 · Issue 5
Abstract
Using an instrumental variables strategy, we estimate the causal effect of income on children's math and reading achievement. Our identification derives from the large, nonlinear changes in the Earned Income Tax Credit. The largest of these changes increased family income by as much as 20 percent, or approximately $2,100, between 1993 and 1997. Our baseline estimates imply that a $1,000 increase in income raises combined math and reading test scores by 6 percent of a standard deviation in the short run. Test gains are larger for children from disadvantaged families and robust to a variety of alternative specifications. (JEL H24, H31, I21, I38, J13)
Keywords
Personal Income and Other Nonbusiness Taxes and Subsidies, includes inheritance and gift taxes, Fiscal Policies and Behavior of Economic Agents: Household, Analysis of Education, Welfare and Poverty: Government Programs, Provision and Effects of Welfare Programs, Fertility, Family Planning, Child Care, Children, Youth
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