An unintended consequence of the Earned Income Tax Credit: Maternal labor supply and child development

This paper examines whether the 1993 Earned Income Tax Credit expansion affected children of single and married mothers differently, given their sharply different labor supply incentives. Using a difference‐in‐differences design, I find that the expansion reduced combined Peabody Individual Achievement Tests math and reading scores of single mothers' children by 0.14 standard deviations relative to married mothers' children. Mechanism analyses provide internally consistent evidence that increased maternal employment was accompanied by reduced cognitive stimulation and fewer time‐intensive parental inputs, suggesting that reduced caregiver–child interactions may have contributed to these effects and underscoring the potential need for complementary policies such as access to high‐quality child care.