The effects of income on health: new evidence from the Earned Income Tax Credit

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This study examines the relationship between income and health by using an expansion of the Earned Income Tax Credit (EITC), which increased benefits to households with at least two children, as a source of exogenous variations of earnings. The paper adds to previous work by: (1) estimating treatment effects on the treated using simulated EITC benefits and longitudinal data; (2) testing whether health effects vary across the three different parts of the EITC schedule; (3) examining the role of food expenditures and health insurance as potential mechanisms. The study finds that income improves the likelihood of affected heads of households reporting to be in excellent or very good health by 6.9 to 8.9 percentage points. The effects are largest in the plateau phase of the EITC schedule, where previous researchers have identified pure income effects of the program. The results are robust to several additional specifications, including a semi-parametric DD model and specifications that account for the potential
endogeneity of sample. When examining potential channels underlying the relationship between income and health, I find that affected household increase their food expenditures by 10.5 to 20.3 percent and are 1.52 percent more
likely to have health insurance coverage.
LanguageEnglish
Number of pages34
JournalReview of Economics of the Household
Early online date11 Aug 2018
DOIs
Publication statusE-pub ahead of print - 11 Aug 2018

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earned income
income tax
credit
income
health
health insurance
evidence
expenditures
food
income effect
insurance coverage
Income
Health
Earned income tax credit
Household
Health insurance
Schedule
Food expenditure

Keywords

  • income
  • health
  • Earned Income Tax Credit
  • food expenditures

Cite this

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abstract = "This study examines the relationship between income and health by using an expansion of the Earned Income Tax Credit (EITC), which increased benefits to households with at least two children, as a source of exogenous variations of earnings. The paper adds to previous work by: (1) estimating treatment effects on the treated using simulated EITC benefits and longitudinal data; (2) testing whether health effects vary across the three different parts of the EITC schedule; (3) examining the role of food expenditures and health insurance as potential mechanisms. The study finds that income improves the likelihood of affected heads of households reporting to be in excellent or very good health by 6.9 to 8.9 percentage points. The effects are largest in the plateau phase of the EITC schedule, where previous researchers have identified pure income effects of the program. The results are robust to several additional specifications, including a semi-parametric DD model and specifications that account for the potentialendogeneity of sample. When examining potential channels underlying the relationship between income and health, I find that affected household increase their food expenditures by 10.5 to 20.3 percent and are 1.52 percent morelikely to have health insurance coverage.",
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The effects of income on health : new evidence from the Earned Income Tax Credit. / Lenhart, Otto.

11.08.2018.

Research output: Contribution to journalArticle

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