Excerpt from TaxProf Blog: (click for entire article)
New York Times: Do Tax Credits Encourage Work?, by Casey B. Mulligan (University of Chicago, Department of Economics):
The earned-income tax credit is often said to encourage work, but it may do just the opposite. ... The chart below shows the credit’s schedules for the 2011 tax year as a function of annual earned income for a given family situation (other family situations have the same basic shape). The schedule shown illustrates the mountain-plateau pattern described above: an increasing portion for the lowest incomes, a flat portion, a decreasing portion and then finally a flat portion of zero.