Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings: Web Appendix

A Sample and Variable De…nitions 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 in ‡ation using the o¢ cial IRS in ‡ation parameters used to index the tax system. Variable De…nitions for Tax Filers. We use two earnings concepts in our analysis, both of which are de…ned 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 …led by employers on behalf of the primary and secondary …lers. 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 de…ne 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 …ling jointly, we assign both individuals in the couple the household-level 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 de…ne earnings at the family level, changes in marital status can a¤ect an individual's earnings even if his or her own earnings do not change. 3 We de…ne 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 de…ne 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 …