Potential Impact of EITC Adjustments on Financial Self-Sufficiency among Low-Income Families: A Simulation Model

Authors

Younghee Lim, Louisiana State University
Catherine Lemieux, Louisiana State University

Keywords

Earned Income Tax Credit, cost-of-living, low-income working families, families with children, financial self-sufficiency

Abstract

Policies that help low-income mothers find and keep employment as a means of obtaining self-sufficiency have been a focal point of the welfare reform debate in the past decade. In the midst of this dialogue, the Earned Income Tax Credit (EITC) has gained popularity as one of the core work support programs for America's low- and moderately low-income families with children. This study compares the estimated effects of EITC when its value deteriorated in the late 1990s with that of a simulated EITC for which the real value kept pace with the actual cost of living on welfare caseload reductions. Results indicate that the simulated EITC model showed a significantly greater impact on promotingfinancial self-sufficiency among low-income families. Policy and practice implications for strengthening the purchasing power of the EITC conclude this article.

Recommended Citation

Lim, Younghee and Lemieux, Catherine (2008) "Potential Impact of EITC Adjustments on Financial Self-Sufficiency among Low-Income Families: A Simulation Model," The Journal of Sociology & Social Welfare: Vol. 35: Iss. 2, Article 4.
DOI: https://doi.org/10.15453/0191-5096.3331
Available at: https://scholarworks.wmich.edu/jssw/vol35/iss2/4