Problem
I. What is the earned income tax credit? In an indifference curves/budget constraint graph show the case where an individual works more and show a case where an individual works less when an earned income tax credit is enacted. Assume that originally the individual has no endowment. Describe in words each case.
II. What are the two major conclusions from economic theory about the impact the earned income tax credit has on labor markets?
III. Describe how the difference-in-differences estimator was used to highlight one of the two major conclusions.