The Intergenerational Transmission of Poverty and Public Assistance: Evidence from the Earned Income Tax Credit

This paper examines the intergenerational effects of the Earned Income Tax Credit (EITC) on poverty and public assistance use. Using data from the PSID, we find that increased exposure to the EITC in childhood reduces the use of public assistance in adulthood (WIC and other public assistance) and reduces the likelihood of being in poverty (<100% of poverty) or near poor (<200% of poverty) by about 7 percentage points. These findings build on a growing literature that considers the intergenerational impacts of public policy and suggests that the economic benefits of policies in one generation may have long-term effects on the next generation.