Using Di§erences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings - Web Appendix - Variable DeÖnitions

Sep 19, 2026

Upload by Aldword

Web appendix text details how the analysis sample and key monetary and demographic variables are constructed to study impacts of the EITC on earnings across neighborhoods. It specifies that monetary variables are expressed in 2010 dollars using official IRS inflation parameters, defines total and wage earnings from 1040 and W-2 sources, explains handling of pre-1999 wage measures, income trimming, family-level child counts, marital assignment, and ZIP code assignment. Core and cross-sectional samples are restricted to EITC-relevant households and balanced to avoid attrition.

LanguageEnglish

CategoryGeneral

FormatPDF

Pages22

Reading Time8 min

AccessFree to download

A Sample and Variable DeÖnitions

Monetary measurement and inflation adjustment

Earnings and children variable definitions

Marital status and household-level assignments

Income trimming and ZIP code assignment

Missing data and selection considerations

Core sample construction

Cross-sectional analysis sample

Using Di§erences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings: Web Appendix Raj Chetty, John Friedman, and Emmanuel Saez A Sample and Variable DeÖnitions This appendix expands on Section II.B to provide more detailed information on the construction of our analysis samples. As described in the text, we express all monetary variables in 2010 dollars, adjusting for ináation using the o¢ cial IRS ináation parameters used to index the tax system. Variable DeÖnitions for Tax Filers. We use two earnings concepts in our analysis, both of which are deÖned at the household (tax return) level because the EITC is based on household income. Total earnings is the total amount of earnings used to calculate the EITC. This is essentially the sum of wage earnings and net self-employment earnings reported on the 1040 tax returns.1 Wage earnings is the sum of wage earnings reported on all W-2 forms Öled by employers on behalf of the primary and secondary Ölers. Data from W-2 forms are available only from 1999 onward. For this reason, we focus primarily on the period from 1999-2009 when analyzing wage earnings impacts. However, our event studies of earnings around child birth track individuals over several years and require measures of wage earnings prior to 1999 . In these cases, we deÖne wage earnings as total wage earnings reported on the 1040 tax return form for 1996-1998 .2 We trim all income measures at-$20K and $50K to focus attention on the relevant range for the EITC. For married individuals Öling jointly, we assign both individuals in the couple the householdlevel total earnings and wage earnings because the EITC is based on household income. However, we structure our analysis based on an individual-level panel to account for potential changes in marital status. Because we deÖne earnings at the family level, changes in marital status can a§ectan individualís earnings even if his or her own earnings do not change.3 We deÖne the number of children as the number of children claimed for EITC purposes. The EITC children variable is capped at 2 from 1996-2008 and 3 in 2009 . For individuals who report the maximum number of EITC children, we deÖne the number of children as the maximum of EITC children and the number of dependent children claimed on the tax return. If the number of children claimed for EITC purposes is missing because the tax return does not claim the EITC 1 More precisely, total earnings is the sum of the wage earnings line on the 1040 plus the Schedule C net income line on the 1040 form minus 1/2 of the self-employment tax on the 1040 adjustments to gross income. This adjustment is made in the tax code to align the tax treatment of wage earnings and self-employment earnings for Social Security and Medicare taxes. These taxes are split between employers and employees for wage earners, and wage earnings are reported net of the employer portion of the tax. 2 Total wage earnings reported on the tax return also include some minor forms of wage earnings not reported on W-2 forms, such as tips. The W-2 earnings measure is preferable because individuals could misreport wage income that is not third party reported on W-2 forms. None of our results are sensitive to the exclusion of pre-1999 data because we only use these data to assess pre-period trends. 3 We have checked that our results are not driven by marriage e§ects by re-doing the analysis using solely individual earnings, instead of family earnings. (e.g., because earnings are above the eligibility cuto§), we deÖne the number of children as the number of dependent children.4 Finally, we deÖne ZIP code as the ZIP code from which the individual Öled his year t tax return. If an individual did not Öle in a given tax year, then we use the ZIP code reported as the home address on the W-2 with the largest earnings reported for that individual in that year. We do not observe total earnings or number of children for individuals

FAQs

How are monetary variables converted for the analysis in this web appendix?

All monetary variables are expressed in 2010 dollars, adjusted for inflation using official IRS inflation parameters used to index the tax system.

What definitions are used for total earnings and wage earnings?

Total earnings is used to calculate the EITC at the household level and is essentially wage earnings plus net self-employment earnings from 1040 tax returns. Wage earnings come from W-2 forms (preferred) and are defined from total wage earnings on 1040 for 1996–1998 in cases needed for event studies.

How is the analysis sample restricted in the core sample definition?

The core analysis sample includes individuals meeting three conditions in at least one year between 1996 and 2009: they file as a primary or secondary filer, have total earnings below $50,000 (in 2010 dollars), and claim at least one child. Observations with ITINs are removed.

Sep 19, 2026

Upload by Aldword