REPAIRING THE SAFETY NET - IS THE EITC THE RIGHT PATCH

Using data from the Michigan Panel Study of Income Dynamics, this arti cle estimates the impact of the Earned Income Tax Credit (EITC) on eco nomic risk. Risk is measured through the variance of full income (inco me holding labor supply constant). The results show that the EITC sign ificantly reduces economic risk, but its effects are weaker dollar for dollar than traditional means-tested programs like Food Stamps. The d ifference is not statistically significant, however. Moreover, for man y middle-class people, the risk-reduction benefits of the EITC exceed the tax burden it imposes. This is less true of means-tested transfers . These results are significant for the politics of antipoverty policy . They show that a real-world antipoverty program can generate enough middle-class economic security to build for itself solid base of polit ical support.