PAYING PEOPLE FOR THEIR LEISURE TIME WORKS:

What would you think if a presidential candidate -- Republican or Democrat -- proposed a new federal program claiming to reduce poverty, boost employment, improve the health of infants and mothers, and increase the likelihood that people would graduate from college? You'd probably think the candidate was blowing a lot of smoke.

Yet the earned income tax credit is doing every one of these things. In recent years, a growing body of research has shown that unlike many antipoverty efforts, the EITC is not only achieving its primary goals but also having unexpected secondary benefits. And a new paper, released last month, demonstrates that the news is even better than the program's advocates thought.

The operation of the EITC is fairly simple. If you're in the labor force, but don't make much money, you get a tax credit at the end of the year. The amount depends on how much you make and how many children you have. In 2014, the maximum for someone with no qualifying children was $496. For someone with three or more qualifying children, the maximum was $6,143.

The original goals of the EITC were simple: reduce poverty while also increasing employment. The credit would provide help to the working poor, and by making work more remunerative, it would also increase people's incentive to join the labor market. Last month's research, by Hilary Hoynes, an economist at the University of California at Berkeley, and the Treasury Department's Ankur Patel, offers the most comprehensive assessment of the credit's effects on both counts.

Much of the authors' analysis explores the consequences of Congress's 1993 decision to increase the credit. Focusing on families led by single women, they find that a $1,000 increase produced major reductions in the poverty rate -- specifically, a 9.4 percentage-point reduction in the share of families below the poverty line.

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