Evaluating the effect of the Earned Income Tax Credit in improving labor market outcomes for the working poor

The Earned Income Tax Credit (EITC) was significantly expanded in 2019, making it the main income support scheme for the working poor. This paper analyzes whether the EITC improves labor market outcomes for recipients. We find no evidence that it increases work by increasing the number of days or hours worked, or increases earnings. There is a need to provide the employment safety net to help the EITC recipients get better jobs. First, 30% of the EITC recipients look for a job. There is a need to encourage them to participate in the National Employment Support System, which provides both income support and employment service for the vulnerable job seekers who do not receive unemployment insurance benefits. Second, only 40% of the EITC recipients are enrolled in social insurance. It is necessary to strengthen social protection against the social risk by supporting social insurance premiums for the EITC recipients.