Hoynes-Moffit Statement Regarding Substitution Effect
Hoynes-Moffit Statement Regarding Substitution Effect
Hoynes-Moffit Statement Regarding Substitution Effect
Given the exis ng law, and the policy we were expanding, it was the
assessment of our commi ee that the “income e ects” of the policy
change would be more important and the subs tu on e ect would be
muted. Why? Because going from $1000 to $3000 is a large increase in
income! And losing the 15% phase-in of the exis ng CTC—which has a
small e ect on the income gain from working—we regarded to be more
modest. We judged that most people would no ce a large $2000
increase in income more than they would no ce a very small reduc on
in the working gain, and that they would respond more to the former.
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Hilary Hoynes
Professor of Economics and Public Policy
Haas Dis nguished Chair of Economic Dispari es
Director, Berkeley Opportunity Lab
University of California, Berkeley
Robert Mo
Krieger-Eisenhower Professor of Economics
Department of Economics
Johns Hopkins University
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