Investigating the Impact of EITC Expansion on Fathers' Time with Children: The Mediating Role of Mothers' Work Hours

Background: Expanding the Earned Income Tax Credit (EITC) has notably benefited low- to middle-income families by offering financial relief, which has been linked with increased education and earnings for low-income mothers. These benefits are predominantly attributed to the EITC's incentive for increased labor force participation and higher earnings before taxes. Yet, there is a concern that the augmented work hours of mothers, incentivized by the EITC, might counteract the advantages of increased family income. Prior studies emphasize the EITC's efficacy in encouraging maternal employment; however, the influence on parental involvement, particularly that of fathers, has not been thoroughly explored. This study explores the effect of the EITC on paternal engagement with their children, with a particular emphasis on how changes in maternal work hours serve as a mediating factor.

Methods: The American Recovery and Reinvestment Act of 2009 led to the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that increased EITC benefits for larger families and adjusted phase-out thresholds. Using data from the American Time Use Survey (ATUS) and the Current Population Survey (CPS) from 2003 to 2019, I employ a difference-in-differences (DID) approach to compare outcomes between families with a single child and those with three or more, net of sociodemographic characteristics, before and after the PATH Act was implemented. To examine how changes in mothers' labor hours influence father’s involvement, the analysis includes two additional models. The first model explores the mediating effect of maternal work hours on fathers' caregiving time. The second distinguishes between the roles of mothers working full-time and part-time in order to examine how these employment patterns serve as moderators of father’s engagement.

Results: Preliminary results indicate that the EITC expansion leads to an increase in maternal work hours, resulting in a considerable reallocation of paternal time towards caregiving and leisure activities. It is also associated with a marginal decrease in their working hours.

Implications: The results suggest policy expansions like the EITC play a critical role in reshaping family dynamics in addition to supplementing families' incomes. This highlights the importance of considering broader socio-economic outcomes in policy evaluation. It also underscores the need for policy evaluations to measure time use, thereby enriching discussions on tax policies' capacity to promote family well-being and support a fairer sharing of caregiving duties.