Review of Economics of the Household

, Volume 11, Issue 4, pp 659–680 | Cite as

Do single mothers in the United States use the Earned Income Tax Credit to reduce unsecured debt?

  • H. Luke Shaefer
  • Xiaoqing Song
  • Trina R. Williams Shanks
Article

Abstract

The Earned Income Tax Credit (EITC) is a refundable credit for low-income workers mainly targeted at families with children. This study uses the Survey of Income and Program Participation’s topical modules on Assets and Liabilities to examine associations between the EITC expansions during the early 1990s and the unsecured debt of the households of single mothers. We use two difference-in-differences comparisons over the study period 1988–1999, first comparing single mothers to single childless women, and then comparing single mothers with two or more children to single mothers with exactly one child. In both cases we find that the EITC expansions are associated with a relative decline in the unsecured debt of affected households of single mothers. While not direct evidence of a causal relationship, this is suggestive evidence that single mothers may have used part of their EITC to limit the growth of their unsecured debt during this period.

Keywords

Earned Income Tax Credit Single Mothers Unsecured Debt 

JEL classification

H23 H53 I38 

Supplementary material

11150_2012_9144_MOESM1_ESM.xlsx (63 kb)
Supplementary material 1 (XLSX 63 kb)
11150_2012_9144_MOESM2_ESM.docx (104 kb)
Supplementary material 2 (DOCX 104 kb)

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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  • H. Luke Shaefer
    • 1
  • Xiaoqing Song
    • 2
  • Trina R. Williams Shanks
    • 1
  1. 1.School of Social WorkUniversity of MichiganAve Ann ArborUSA
  2. 2.Department of EconomicsUniversity of MichiganAnn ArborUSA

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