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Earned income tax credit and female labor supply : Empirical analysis and policy agenda

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Frame of Image it comes into effect. According to the simulation results, if EITC is implemented, female labor market participation and hours of work would increase. However, when women are divided into groups, there is a tendency that labor market participation and work hours are increased for women with couple's aggregate income under 17 million won while EITC does not have any effect on women with a spouse who do not have any income and on single childless women. By predicting the effects of EITC and presenting basic models and data in the related fields, this study will provide useful implications for follow-up studies. Keywords: EITC, participation in the labor supply, labor supply hour, female 1. Introduction The total number of households eligible for 2009 EITC based on their income in 2008 will be 630,000, and it is estimated that 470 billion won will be required every year. Two primary goals of the Korean tax reform are: on one hand, wider support for economic development and, on the other, increased competitiveness of the taxation system through the introduction of an advanced taxation system. To achieve the former, Earned Income Tax Credit (EITC) has been introduced and implemented with the expectation of promoting economic development, which will lead to stabilizing economic security in the lives of middle and working classes. EITC is a top government taxation policy designed to encourage the labor endeavors of the working poor by increasing the income and to spread out the burd


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Title Earned income tax credit and female labor supply
Similar Titles
Sub Title

Empirical analysis and policy agenda

Material Type Articles
Author(English)

Cho, Sun-Joo

Publisher

[Seoul]:The Korean Women's Development Institute

Date 2009
Journal Title; Vol./Issue GSPR:vol. 2
Pages 14
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Social Development < Gender
Holding KWDI; KDI School

Abstract

The purpose of this paper is to analyze the EITC effects on the economic activities of women by
employing a labor supply function estimation, whether they are economically active or not and how
many hours they work. This paper is based on the Korea Welfare Panel data and has empirical
limitations in predicting the EITC effects and presenting various alternatives before it comes into effect.
According to the simulation results, if EITC is implemented, female labor market participation
and hours of work would increase. However, when women are divided into groups, there is a
tendency that labor market participation and work hours are increased for women with couple's
aggregate income under 17 million won while EITC does not have any effect on women with a
spouse who do not have any income and on single childless women.
By predicting the effects of EITC and presenting basic models and data in the related fields,
this study will provide useful implications for follow-up studies.

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