Agenda

Courtney van Houtven (Duke University) - The effect of a large anti-poverty program on the long-term care workforce in the United States (with Ngoc Dao, Yang Wang)

Abstract:

This study explores the effect of the Earned Income Tax Credit (EITC), a large anti-poverty program, on the supply of formal long-term care (LTC) workers in the United States. The EITC is a refundable tax credit for low- and moderate-income working families to supplement their incomes, encourage and reward work, and reduce tax burdens. The EITC has an 80% uptake rate among those qualified for the benefit. Past research has established that the EITC benefits have been concentrated among those in the bottom 40 percent of the income distribution, especially for those low-income families with children, lifting millions of people, many of them children, out of poverty. We know little, however, about how the EITC specifically affects labor supply for a low-wage and volatile workforce in the health sector, the long-term care workforce. This paper uses a quasi-experimental design across two decades of EITC policy changes at the state level to estimate how this policy affects labor supply in the long-term care sector. We find that the EITC increased LTC employment, particularly among females, childless workers, and individuals identifying as White or Hispanic, highlighting its potential to alleviate workforce shortages in critical health care areas. There are minimal effects of EITC on work hours, however. This research adds to the evidence demonstrating EITC’s broad and lasting benefits by quantifying positive spillovers of EITC to the long-term care workforce, a sector critical to public health and welfare.