Earned income tax credit and crime

Lenhart, Otto (2021) Earned income tax credit and crime. Contemporary Economic Policy, 39 (3). pp. 589-607. ISSN 1465-7287 (https://doi.org/10.1111/coep.12522)

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Abstract

This study examines the relationship between earned income tax credit (EITC) laws and crime. Using data from 1999–2017, a period with 73 state EITC changes, I evaluate the effects of state-level EITCs on violent and property crime. Estimating difference-in-differences models, I find that higher EITCs are associated with significant reductions in violent crime, while not affecting property crimes. Introducing high state EITC is associated with a 10.0% reduction in violent crimes, which corresponds to 40 fewer crimes per 100,000 individuals. Event study estimates confirm the negative association between EITC generosity and violent crime.

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