LABOR SUPPLY RESPONSE TO THE EARNED INCOME-TAX CREDIT

This paper examines the impact of the Tax Reform Act of 1986 (TRA86), which included an expansion of the earned income tax credit, on the la bor force participation and hours of work of single women with childre n. We identify the impact of TRA86 by comparing the change in labor su pply of single women with children to the change for single women with out children. We find that between 1984-1986 and 1988-1990, single wom en with children increased their relative labor force participation by up to 2.8 percentage points. We observe no change in the relative hou rs worked by single women with children who were already in the labor force.