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The EITC and occupational mobility
DOI:10.1007/s00181-026-02892-8.png)
Abstract
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I estimate that the implementation of state-level Earned Income Tax Credit (EITC) supplements results in a 3% reduction in the likelihood of downward occupational mobility among single mothers aged 19 to 35. This outcome, characterized by an elasticity of -\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$-$$\end{document}1.4, is not attributable to shifts in occupational distribution, wage changes, variations in workforce participation, or alterations in working hours. Rather, it aligns with the EITC's enhanced compensation for mid-wage occupations, which diminishes the incentive for workers to transition into lower-wage roles. This evidence suggests that the EITC may exert a lasting effect on the skill development of employed workers, beyond its immediate financial benefits.
Keywords:
EITC
Occupational mobility
Downward occupational mobility
Skill development
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