EITC expansion linked to developmental declines for some children

An analysis of U.S. survey data suggests that the expansion of the Earned Income Tax Credit during welfare reforms in the 1990s may have adversely affected the development of some children in low-income single-mother families. Compared with children of married mothers, children of single mothers experienced an estimated decline of 0.14 standard deviations in combined mathematics and reading test scores after the expansion, according to the peer-reviewed study published in Contemporary Economic Policy. The researchers described the result as an unintended consequence of a policy designed to support family finances and encourage employment.

The study examined mother–child survey data collected from 1990 through 1996. During this period, policymakers expanded the EITC, which provides larger tax credits to households as earned income rises, to improve financial support for low-income families without weakening incentives to work. The credit change was expected to increase employment among eligible recipients, with particularly strong work incentives for single mothers. In the analysis, greater maternal employment was associated with changes in children’s test performance and development relative to the trends observed among children of married mothers.

After the EITC expansion, the combined mathematics and reading scores of single mothers’ children were estimated to fall by 0.14 standard deviations relative to those of married mothers’ children. The researchers also estimated a decline of 0.68 standard deviations in early motor and social development among younger children of single mothers. That second estimate was based on a smaller sample and should therefore be interpreted with caution. Together, the findings indicate that some developmental outcomes may have weakened among children in the group most affected by the policy’s stronger employment incentives, although the study does not establish that the EITC expansion caused every measured difference.

The analysis linked the developmental changes to changes in the home environment accompanying increased employment. Children of single mothers reportedly received less cognitive stimulation at home and had fewer time-intensive interactions with their caregivers than children of married mothers. The authors suggested that reduced caregiver–child connection may have contributed to the observed declines. In other words, the additional income and employment encouraged by the tax credit did not necessarily translate into developmental gains when increased time in paid work coincided with reduced parental attention or stimulation. The findings concern short-term developmental measures and do not show how the children fared later.

Study author Jeehyun Ko, PhD, of the Korea Institute of Public Finance, said that for low-income single mothers, reduced time with their children as work increased may have outweighed the developmental benefits of higher income in the short term. Ko said pairing work incentives with affordable, high-quality childcare could help families balance employment and time with their children. The result should not be interpreted as evidence against the EITC’s broader goals, including financial support and work incentives. Instead, it identifies a possible trade-off between labor-force participation, household income and children’s access to intensive parental interaction during the years covered by the analysis. Because the study relies on observational survey data and includes a smaller sample for one developmental outcome, additional research would be needed to assess the robustness and wider consequences of the estimates.

Subject of Research: Effects of the Earned Income Tax Credit expansion on child development

Article Title: Has a US anti-poverty program negatively affected some children’s development?

Article References: Has a US anti-poverty program negatively affected some children’s development?. Original publication (Bibliographic details unavailable.)

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Keywords: Earned Income Tax Credit, child development, single mothers, maternal employment, test scores, cognitive stimulation, US welfare reform, public policy, anti-poverty, program, negatively, affected