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The rainy day Earned Income Tax Credit: A reform to boost financial security by helping low-wage workers build emergency savings

Alternate Title: 
Rainy day Earned Income Tax Credit: A reform to boost financial security by helping low-wage workers build emergency savings
Date Added to Library: 
Thursday, March 22, 2018 - 14:19
Digital Object Identifier (DOI): 
10.7758/RSF.2018.4.2.08
Priority: 
normal
Individual Author: 
Halpern-Meekin, Sarah
Greene, Sara Sternberg
Levin, Ezra
Edin, Kathryn
Reference Type: 
Published Date: 
February 2018
Published Date (Text): 
February 2018
Publication: 
RSF: The Russell Sage Foundation Journal of the Social Sciences
Volume: 
4
Issue Number: 
2
Page Range: 
161-176
Year: 
2018
Language(s): 
Abstract: 

Financial stability depends on emergency savings. Low-wage workers regularly experience drops in income and unexpected expenses. Households with savings absorb these financial shocks but most low-income Americans lack rainy day savings. Therefore, even a small shock, like car repairs, can result in a cascade of events that throws a low-income family into poverty. Nonetheless, existing policies address emergency savings only indirectly. However, the Earned Income Tax Credit (EITC) already functions as an imperfect, makeshift savings tool. This lump sum refund at tax time gives workers a moment of financial slack, but many EITC recipients lack emergency reserves later in the year. By creating a “Rainy Day EITC” component of the existing EITC, policymakers can help low-wage workers build up emergency savings. (Author abstract)

Geographic Focus: 
Page Count: 
16
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