The effects of increasing income for vulnerable families: better birth outcomes, continued disparities

ABSTRACT

Evidence suggests that cash transfers through the Earned Income Tax Credit (EITC) programme induce better birth outcomes. We use US Vital Statistics data for all births in Maryland from 1995–2004 to capture the casual effects of implementing a local EITC programme across households. Alternative difference-in-differences (DD) comparison groups compare treatment households with like households in non-EITC counties and ineligible households in the same county. We find that the implementation of the local EITC reduced the probability of low birth weight by as much as 3.5 percentage points for births to White and Black mothers with little evidence of an effect for Hispanic mothers. This reduction represents a 46% decrease for White mothers and 26% decrease for Black mothers. Despite improving average birth outcomes, EITC cash transfers did not reduce disparities in birth outcomes.

KEYWORDS:

• Income transfer
• tax credits
• infant health
• local tax policy
• birth weight
• disparities

JEL CLASSIFICATION:

• J13
• H24
• H75
• I12

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Eligibility requirements are explained in more detail here, https://www.irs.gov/uac/Newsroom/Earned-Income-Tax-Credit-Do-I-Qualify.

² See the Montgomery County Department of Finance for more information: https://www.montgomerycountymd.gov/finance/taxes/review.html. We are unable to determine when state EITC checks are mailed to recipients, but we are unaware of a systematic mailing date for these state checks.