Earned Income Tax Credit and Female Labor Supply

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.