Effective Policy for Reducing Poverty and Inequality? The Earned Income Tax Credit and the Distribution of Income

The United States stands out among industrialized nations as one with high poverty and income inequality. In 2016, the supplemental poverty measure shows that 13.9% of all persons, and 15.1% of children, lived in families with incomes below the poverty level. Since the mid-1970s earnings for less skilled workers have stagnated, and real family income for the bottom 20% of the population has made no gains. At the same time, there is the related problem of declines in employment rates among prime-aged men, and more recently, women. In a recent study, Hilary Hoynes and Ankur Patel examined whether one strategy to fight poverty—the earned income tax credit (EITC)—is working.
Continue reading “Effective Policy for Reducing Poverty and Inequality? The Earned Income Tax Credit and the Distribution of Income”