This paper studies the job creation effect of earned income tax credit in
Korea via the labor supply channel using the NaSTaB (National Survey of Tax
and Benefit) Panel Data. The analyses are separately carried out for single
parents and married couples. All show that the tax credit program had a
significant positive effect on the household’s labor supply. Using the estimation
results we were able to estimate the number of jobs created by EITC and the
cost of creating a single job match. During 2009∼2011, for married couples
the EITC is estimated to have created 22,500 new job matches using ￦14.2
million for each job match while for single parent households it is estimated to
have created 35,800 new job matches using ￦3 million for each match.
However, since the number of sample households receiving EITC in the
available panel dataset is quite small and the estimated number of jobs depends
on the assumptions adopted by the study, further research efforts to overcome
the shortcomings of our analysis are strongly called for.