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American Economic Review Vol. 102 No. 5 2012

The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit

Gordon B. Dahl1; Lance Lochner2

1 Department of Economics, University of California-San Diego, 9500 Gilman Drive No. 0508, La Jolla, CA 92093-0508. · 2 Department of Economics, University of Western Ontario, Social Science Centre, 1151 Richmond Street North, London, Ontario N6A 5C2, Canada.

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.

DOI
10.1257/aer.102.5.1927
Volume
102
Issue
5
Pages
1927-1956
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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