EITC Expansions, Earnings Growth, and Inequality: Evidence from Washington, D.C.

This discussion paper from the University of Kentucky’s Center for Poverty Research analyzes longitudinal administrative tax data to determine the correlation between Earned Income Tax Credit (EITC) expansions in Washington, D.C. and income and wage inequality. This analysis, covering expansions of EITC between 2001 and 2009, are associated with pre-tax earnings growth between 3 and 4 percent. The authors conclude that this association complements other research that demonstrates EITC has a positive effect on labor market outcomes and household well-being.