Suppose a Researcher Identifies the Effect of the Earned Income

question 25

Multiple Choice

Suppose a researcher identifies the effect of the Earned Income Tax Credit (EITC) on the labor supply of single mothers by comparing the labor supply of those mothers after the EITC expansion with the labor supply of single women without children before and after the EITC expansion.Which of the following statements would cause the estimates from such a study to be biased?

• A) Single women without children tend to work more hours than do single women with children.
• B) Preferences regarding work among single women with children change over time.
• C) Single women with children have higher income requirements for their larger family than do single women without children.
• D) Preferences regarding work among single women with children remain the same over time.

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Definitions:

Retirement Contributions

Money set aside into retirement accounts, such as a 401(k) or IRA, often with tax advantages.

Medicare

A federal health insurance program in the United States primarily for people who are 65 or older, but also for some younger people with disabilities.

Health Insurance

A form of insurance coverage that pays for medical and surgical expenses incurred by the insured, or reimburses the insured for expenses incurred from illness or injury.

Craft Kits

Prepackaged sets containing materials and instructions for creating handcrafted items.