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Title: The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit
Resulting in 1 citation.
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Dahl, Gordon B. Lochner, Lance John |
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The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit Discussion Paper No. 1361-09, Institute for Research on Poverty, January 2009. Also: http://www.irp.wisc.edu/publications/dps/pdfs/dp136109.pdf Cohort(s): Children of the NLSY79 Publisher: Institute for Research on Poverty (IRP), University of Wisconsin - Madison Keyword(s): Achievement; Child Development; Children, Academic Development; Children, Poverty; Earned Income Tax Credit (EITC); Endogeneity; Family Income; Family Influences; Heterogeneity; Modeling, Fixed Effects; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading) Permission to reprint the abstract has not been received from the publisher. Past estimates of the effect of family income on child development have often been plagued by endogeneity and measurement error. In this paper, we use two simulated instrumental variables strategies to estimate the causal effect of income on children's math and reading achievement. Our identification derives from the large, non-linear changes in the Earned Income Tax Credit (EITC) over the last two decades. The largest of these changes increased family income by as much as 20 percent, or approximately $2,100. Using a panel of almost 5,000 children matched to their mothers from National Longitudinal Survey of Youth datasets allows us to address problems associated with unobserved heterogeneity, endogenous transitory income shocks, and measurement error in income. Our baseline estimates imply that a $1,000 increase in income raises combined math and reading test scores by 6 percent of a standard deviation in the short run. The gains are larger for children from disadvantaged families and are robust to a variety of alternative specifications. We find little evidence of long-run income effects, with most of the effects disappearing after one year. ... To make the PIAT test scores more easily interpretable, we create normalized test scores with a mean of zero and a standard deviation of one based on the random sample of test takers (i.e. excluding the poor and minority oversamples). We also create a combined math-reading score, which takes the average of our normalized math and reading scores. This is then re-normalized to have a mean of zero and standard deviation of one in the random sample.2 |
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Bibliography Citation
Dahl, Gordon B. and Lance John Lochner. "The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit." Discussion Paper No. 1361-09, Institute for Research on Poverty, January 2009. |