The Impact of Family Income in the First Year of Life on Child and Maternal Health: Evidence from the Earned Income Tax Credit

Childhood poverty is associated with a range of adverse health outcomes. Poverty rates are higher for infants than for their older peers, a concerning pattern given that early childhood is time of acute sensitivity to exposures and investments. While there is a large literature documenting the association of family income with child health, isolating causal effects has been challenging due to unobserved confounding. The proposed project will leverage policy features of the Earned Income Tax Credit (EITC), the largest cash transfer program in the US, to estimate the causal effect of family income in a child’s first year of life. Eligibility and benefit amounts for EITC are partially determined by the presence of children on any day of the tax year. As a result of the rule, a child born on December 31 infers benefits to a family that are paid in the following spring, during the child’s first year. However, a child born in January does not infer eligibility until the spring of the following calendar year, after the child’s first year. This feature of the program has been completely ignored by the existing literature. Using a regression discontinuity design and nationally representative samples from the Survey of Income and Program Participation and the National Health Interview Survey, we will examine the causal effects of family income in the first year of life on child physical and mental health and maternal physical and mental health. Taking a life-course perspective, we will examine the effect of income in the first year of life on outcomes through age 6.