Working papers
Misperceived Benefits and Tax-Filing Decisions Among Low-Income Workers
Job Market Paper Latest draft [pdf]
Why do some low-income workers not file their taxes, even though nonfiling means leaving substantial money on the table? Using Michigan administrative tax data and survey data, I show misperceived refunds are a key driver. On average, nonfilers believe they owe $649 in federal taxes, but they are actually due $1,174. I develop a framework of the filing decision and estimate its parameters on a dataset of tax units' filing decisions and tax refunds over time. I exploit two policies that increased the benefit to filing by a similar dollar magnitude, but had very different salience: the tax year 2019 (TY19) stimulus checks and the TY21 EITC expansion. I find that workers perceived a dollar of stimulus as almost three times larger than a dollar of the expanded EITC. I estimate that had workers understood the EITC as well as the stimulus checks, TY21 filing would have risen about 5 percentage points.
Supported by the Horowitz Family Foundation
Work in progress
Information, Beliefs, and Filing-Method Choices of Low-Income Taxpayers
Nearly half of EITC claimants pay for tax preparation they could get for free. Moreover, this widely available free option is more accurate. The Volunteer Income Tax Assistance (VITA) program offers free tax preparation to low-income households and produces fewer errors than paid preparers, who in most states face no competency requirements. Yet VITA usage remains strikingly low: in Michigan, just 1.4% of EITC returns are filed through VITA, while 49% go through paid preparers. A back-of-the-envelope estimate suggests that EITC claimants spend roughly 20% of their credit on preparation fees. Using a field experiment, we seek to understand why low-income households rely on costly, lower-quality filing methods and test whether targeted information about VITA’s existence, quality, and accessibility can shift their behavior.
Supported by the Russell Sage Foundation & the Washington Center for Equitable Growth
Policy publications
Aaronson, Stephanie and Francisca Alba. The Relationship Between School Closures and Female Labor Force Participation During the Pandemic. Washington D.C.: Brookings Institution, 2021. [Link]
Media Coverage: NPR
Aaronson, Stephanie and Francisca Alba. Unemployment Among Young Workers During COVID-19. Washington D.C.: Brookings Institution, 2020. [Link]
Aaronson, Stephanie and Francisca Alba. The Unemployment Impacts of COVID-19: Lessons from the Great Recession. Washington D.C.: Brookings Institution, 2020. [Link]
Anderson, Theresa, David C. Blount, Constance A. Lindsay, Erica Blom, Semhar Gebrekristos and Francisca Alba. Robust and Equitable Measures to Identify Quality Schools. Washington D.C.: Urban Institute, 2019. [Link]