The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit
Abstract
Using an instrumental variables strategy, we estimate the causal effect of income on children's math and reading achievement. Our identification derives from the large, nonlinear changes in the Earned Income Tax Credit. The largest of these changes increased family income by as much as 20 percent, or approximately $2,100, between 1993 and 1997. Our baseline estimates imply that a $1,000 increase in income raises combined math and reading test scores by 6 percent of a standard deviation in the short run. Test gains are larger for children from disadvantaged families and robust to a variety of alternative specifications. (JEL H24, H31, I21, I38, J13)
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The Dahl and Lochner (2012) regression is a 2SLS version of Regression 2 with controls, except that it does not have years fixed effects.
“This regression is a 2SLS version of Regression 2 with controls, except that it does not have years fixed effects.”
From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dahl and Lochner (2012)
The stable groups assumption is presumably satisfied for the Dahl and Lochner (2012) regression because it is likely that for each pair of consecutive years, there are children whose family's expected EITC income does not change.
“The stable groups assumption is presumably satisfied: it is likely that for each pair of consecutive years, there are children whose family's expected EITC income does not change.”
From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dahl and Lochner (2012)
The Dahl and Lochner (2012) regression is a sharp design.
“This is a sharp design.”
From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dahl and Lochner (2012)
In the Dahl and Lochner (2012) regression Equation (4), the dependent variable is the change in test scores for child i between years a and a-1, and the explanatory variables are the change in the EITC income of her family and controls, with the change in expected EITC income based on family income in year a-1 used to instrument for the actual change in family EITC income.
“In regression Equation (4), the dependent variable is the change in test scores for child i between years a and a-1, while the explanatory variables are the change in the EITC income of her family and some controls, and the change in the expected EITC income of her family based on her family income in year a-1 is used to instrument for the actual change of her family's EITC income.”
From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dahl and Lochner (2012)
Cites
Identification and estimation of local average treatment effects
Imbens, G. W., & Angrist, J. D. (1994) · Econometrica · doi:10.2307/2951620 · Cited by 4,101 · see citing works
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Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects
de Chaisemartin, C., & D’Haultfœuille, X. (2020) · American Economic Review · doi:10.1257/aer.20181169 · Cited by 5,031 · see citing works
Income, the Earned Income Tax Credit, and Infant Health
Hoynes, H., Miller, D., & Simon, D. (2015) · American Economic Journal: Economic Policy · doi:10.1257/pol.20120179 · Cited by 551 · see citing works
A unified welfare analysis of government policies.
Hendren, N., & Sprung-Keyser, B. (2020) · The Quarterly Journal of Economics · doi:10.1093/qje/qjaa006 · Cited by 571 · see citing works
Family Poverty Affects the Rate of Human Infant Brain Growth
Hanson, J. L., Hair, N., Shen, D. G., Shi, F., Gilmore, J. H., Wolfe, B. L., & Pollak, S. D. (2013) · PLoS ONE · doi:10.1371/journal.pone.0080954 · Cited by 430 · see citing works
Cook, P., Dodge, K., Farkas, G., Fryer, R., Guryan, J., Ludwig, J., Mayer, S., Pollack, H., & Steinberg, L. (2014) · National Bureau of Economic Research · doi:10.3386/w19862 · Cited by 130 · see citing works
Estimating the Technology of Children's Skill Formation
Agostinelli, F., & Wiswall, M. (2016) · doi:10.3386/w22442 · Cited by 83 · see citing works
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Rindermann, H., & Ceci, S. J. (2018) · Journal for the Education of the Gifted · doi:10.1177/0162353218799481 · Cited by 68 · see citing works
Shaw, D. S., Mendelsohn, A. L., & Morris, P. A. (2021) · Clinical Child and Family Psychology Review · doi:10.1007/s10567-021-00366-0 · Cited by 64 · see citing works
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- Authors
- Dahl, G. B., & Lochner, L.
- Affiliations
- University of California San Diego (US)
- Western University (CA)
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2012-08-01
- Volume
- 102
- Issue
- 5
- Pages
- 1927-1956
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W3125589405
- Cited by
- 832
- References
- 1
- Citations by year
- 2026: 53 · 2025: 62 · 2024: 70 · 2023: 68 · 2022: 70 · 2021: 65 · 2020: 71 · 2019: 54 · 2018: 52 · 2017: 56 · 2016: 65 · 2015: 50 · 2014: 39 · 2013: 27 · 2012: 8
- FWCI
- 192.94
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- American Economic Review (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Education › School Choice and Performance
- Social Sciences › Sociology and Political Science › Intergenerational and Educational Inequality Studies
- Social Sciences › Safety Research › Poverty, Education, and Child Welfare
- Keywords
- Earned Income Tax Credit, household income, children's academic achievement, mathematics achievement, reading achievement, income shocks, disadvantaged families, parental income, education policy
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