Labor Supply Response to the Elimination of the EITC for Undocumented Immigrants : Evidence from the 1996 Welfare Reform

The paper examines the labor market effects of ending the Earned Income Tax Credit (EITC) for undocumented immigrants by requiring a Social Security number to claim the EITC. Exploiting variation across the number of children of undocumented single women, the timing of the policy, and a placebo group of undocumented married men shows that ending the EITC reduced the labor force participation of undocumented single mothers by 7 percentage points. The results suggest that ending the EITC for undocumented immigrants makes the American children of single-mother undocumented immigrants doubly disadvantaged because they not only lack a tax credit but their mothers’ labor supply is also reduced as a result