Report

Optimal design of earned income tax credits: evidence from a British natural experiment

Publisher
Income tax Australia Great Britain
Description

With many countries considering the adoption of a system of earned income tax credits, it is useful to analyse how different types of credits affect labor supply and earnings. Andrew Leigh focuses on a 1999 reform to the UK tax credit system, which increased the value of the credit and reduced the phase-out rate. Using panel data, he found that, over a 15-month period, boosting the credit appears to have raised the labour participation rates, hours, and earnings of those who were eligible to receive it.

Publication Details
Publication Year:
2005