Professor Dan Black and co-author are the first to demonstrate that the Earned Income Tax Credit helps women move to economic opportunity.
Professor Dan Black

When it comes to creating job opportunities for American women living in economically distressed places, policymakers have long grappled with two options: Is it better to invest in improving these places, or to nudge these women to areas with better opportunity?

For millions of women with poor credit and few financial resources, moving is often not an option. New research from the University of Chicago Harris School of Public Policy, however, is the first to reveal that the Earned Income Tax Credit (EITC) for workers with low to moderate income helps women move toward economic opportunity.

“Without the financial resources to put down a security deposit for a new residence or transport belongings, many families find themselves stuck in economically challenged places,” said Professor Dan Black, one of the paper’s authors. “Because the EITC is usually paid as a lump sum, often totaling several thousand dollars, we wanted to explore whether it served as a catalyst for migration toward new opportunities – and it appears that it does.”

Jacob Bastian, Assistant Professor at Rutgers University, was a postdoctoral scholar at Harris.

Black and Jacob Bastian, an Assistant Professor of Economics at Rutgers University and former postdoctoral scholar at Harris, examined nearly two decades of data from the American Community Survey – including household earnings, family size, living conditions and location for adult women ages 18 to 55 – combined with data on variation in state and federal EITC policy.

The results give policymakers a new window into how households might respond to an expanded or regionally targeted EITC program in the future:

  • The EITC increased net migration for women out of rural, distressed areas and into areas with higher labor force participation and lower unemployment. After moving, these women are also less likely to live doubled-up with another family and more likely to have shorter commutes to work.
  • These effects are similar for Black and white women, and larger for women who are unmarried, working, younger and with less education. For states with a higher proportion of EITC-eligible rural women, which benefit the most from the program, the effects are larger.
  • The 2009 federal EITC expansion was particularly significant, accounting by itself for six percent of the decrease in the rural female population from 2005 - 2017.
  • These moves are relatively local, occasionally across counties or commuting zones but always within the same state.

“Without the EITC, the decades-long decrease in migration may have been even larger. While the program is not specifically tied to migration, these results clearly show that it helps women move to economic opportunity,” said Black. “They become more financially independent and gain access to places with better amenities, shorter commutes and an overall improved quality of life.”

The authors suggested that providing EITC recipients with information about the economic conditions in nearby places could further improve migration decisions. In the future, the authors hope to examine the longer-run effects on children, which they expect to be positive. They also hope to further support the findings by examining if these moves are occurring shortly after peak tax-return season, when the EITC payments are distributed.