Changes in EITC Eligibility and Take-up over the Great Recession

Maggie R. Jones, U.S. Census Bureau

Using IRS tax data linked with the Current Population Survey Annual Social and Economic Supplement (CPS ASEC), I examine changes in EITC eligibility and take-up between tax years 2005 and 2009, during which time the Great Recession began and ended. I assess patterns of eligibility among demographic groups based on characteristics that also predict labor market outcomes. Results indicate that, in a period when overall EITC eligibility rates increased, the state unemployment rate had a significant positive effect on eligibility and a significant negative effect on take-up. Meanwhile, although joint filers, those with more children, and men experienced increasing rates of eligibility, those with less education experienced decreasing rates. When data are collapsed into labor market skill groups, preliminary evidence reveals that, compared with high-skilled married men, low-skilled groups experienced greater volatility in employment earnings, but this did not translate into higher EITC eligibility.