Down on their luck
Christopher Wimer et al.
Demography, forthcoming
Abstract:
This study examines historical trends in poverty using an anchored version of the U.S. Census Bureau's recently developed Research Supplemental Poverty Measure (SPM) estimated back to 1967. Although the SPM is estimated each year using a quasi-relative poverty threshold that varies over time with changes in families' expenditures on a core basket of goods and services, this study explores trends in poverty using an absolute, or anchored, SPM threshold. We believe the anchored measure offers two advantages. First, setting the threshold at the SPM's 2012 levels and estimating it back to 1967, adjusted only for changes in prices, is more directly comparable to the approach taken in official poverty statistics. Second, it allows for a better accounting of the roles that social policy, the labor market, and changing demographics play in trends in poverty rates over time, given that changes in the threshold are held constant. Results indicate that unlike official statistics that have shown poverty rates to be fairly flat since the 1960s, poverty rates have dropped by 40 % when measured using a historical anchored SPM over the same period. Results obtained from comparing poverty rates using a pretax/pretransfer measure of resources versus a post-tax/post-transfer measure of resources further show that government policies, not market incomes, are driving the declines observed over time.
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The impact of homelessness prevention programs on homelessness
William Evans, James Sullivan & Melanie Wallskog
Science, 12 August 2016, Pages 694-699
Abstract:
Despite the prevalence of temporary financial assistance programs for those facing imminent homelessness, there is little evidence of their impact. Using data from Chicago from 2010 to 2012 (n = 4448), we demonstrate that the volatile nature of funding availability leads to good-as-random variation in the allocation of resources to individuals seeking assistance. To estimate impacts, we compare families that call when funds are available with those who call when they are not. We find that those calling when funding is available are 76% less likely to enter a homeless shelter. The per-person cost of averting homelessness through financial assistance is estimated as $10,300 and would be much less with better targeting of benefits to lower-income callers. The estimated benefits, not including many health benefits, exceed $20,000.
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Do Minimum Wage Increases Influence Worker Health?
Brady Horn, Joanna Catherine Maclean & Michael Strain
NBER Working Paper, August 2016
Abstract:
This study investigates whether minimum wage increases in the United States affect an important non-market outcome: worker health. To study this question, we use data on lesser-skilled workers from the 1993-2014 Behavioral Risk Factor Surveillance Surveys coupled with differences-in-differences and triple-difference models. We find little evidence that minimum wage increases lead to improvements in overall worker health. In fact, we find some evidence that minimum wage increases may decrease some aspects of health, especially among unemployed male workers. We also find evidence that increases reduce mental strain among employed workers.
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Effects of the Minimum Wage on Infant Health
George Wehby, Dhaval Dave & Robert Kaestner
NBER Working Paper, June 2016
Abstract:
The minimum wage has increased in multiple states over the past three decades. Research has focused on effects on labor supply, but very little is known about how the minimum wage affects health, including children's health. We address this knowledge gap and provide an investigation focused on examining the impact of the effective state minimum wage rate on infant health. Using data on the entire universe of births in the US over 25 years, we find that an increase in the minimum wage is associated with an increase in birth weight driven by increased gestational length and fetal growth rate. The effect size is meaningful and plausible. We also find evidence of an increase in prenatal care use and a decline in smoking during pregnancy, which are some channels through which minimum wage can affect infant health.
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Susan Averett & Yang Wang
Public Finance Review, forthcoming
Abstract:
In 1993, the benefit levels of the earned income tax credit (EITC) were changed significantly based on the number of children in the household. Exploiting this policy change and employing a difference-in-differences plus mother fixed effects framework, we find significantly improved home environment quality for children of unmarried mothers, regardless of their race/ethnicity, and lowered probabilities of having accidents and improved mother-rated health for children of married white mothers. Children of unmarried black and Hispanic mothers also had better mother-rated health. Our results provide new evidence of positive spillover effects of the 1993 EITC expansion and therefore have important policy implications.
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Why Don't Housing Choice Voucher Recipients Live Near Better Schools? Insights from Big Data
Ingrid Gould Ellen, Keren Mertens Horn & Amy Ellen Schwartz
Journal of Policy Analysis and Management, forthcoming
Abstract:
Housing choice vouchers provide low-income households with additional income to spend on rental housing in the private market. The assistance vouchers provide is substantial, offering the potential to dramatically expand the neighborhoods - and associated public schools - that low-income households can reach. However, existing research on the program suggests that housing choice voucher holders live in neighborhoods with schools that are no better than those accessible to other households with similar incomes. Households, in other words, do not seem to spend the additional income provided by the voucher to access better schools. In this analysis we rely on a large-scale administrative data set to explore why voucher households typically do not live near to better schools, as measured by school-level proficiency rates. We combine confidential administrative data from the Department of Housing and Urban Development on 1.4 million housing choice voucher holders in 15 states, with school-level data from 5,841 different school districts, to examine why the average housing voucher holder does not live near to higher-performing schools than otherwise similar households without vouchers. Specifically, we use the large-scale administrative data set to test whether voucher holders living in areas with good schools nearby and slack housing markets move toward better schools when schools become salient for them - that is, when their oldest child becomes school eligible. We take advantage of the thick sample of households with young children provided through our administrative data to implement both a household fixed effects and a regression discontinuity design. Together these analyses shed light on whether voucher households are more likely to move toward better schools when schools are most relevant, and how market conditions shape that response. We find that families with vouchers are more likely to move toward a better school in the year before their oldest child meets the eligibility cutoff for kindergarten, suggesting salience matters. Further, the magnitude of the effect is larger in metropolitan areas with a relatively high share of affordable rental units located near high-performing schools and in neighborhoods in close proximity to higher-performing schools. Results suggest that, if given the appropriate information and opportunities, more voucher families would move to better schools when their children reach school age.
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Old, Sick, Alone, and Poor: A Welfare Analysis of Old-Age Social Insurance Programmes
Anton Braun, Karen Kopecky & Tatyana Koreshkova
Review of Economic Studies, forthcoming
Abstract:
All individuals face some risk of ending up old, sick, alone, and poor. Is there a role for social insurance for these risks and, if so, what is a good programme? A large literature has analysed the costs and benefits of pay-as-you-go public pensions and found that the costs exceed the benefits. This article, instead, considers means-tested social insurance (MTSI) programmes for retirees such as Medicaid and Supplemental Security Income. We find that the welfare gains from these programmes are large. Moreover, the current scale of MTSI in the U.S. is too small in the following sense. If we condition on the current Social Security programme, increasing the scale of MTSI by 1/3 benefits both the poor and the affluent when a payroll tax is used to fund the increase.
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Income Instability and the Response of the Safety Net
Bradley Hardy
Contemporary Economic Policy, forthcoming
Abstract:
This paper examines the response of safety net transfer and tax programs to earnings and income shocks across recessions since the early 1980s. Safety net programs in the United States are designed to dampen economic instability and maintain basic needs for families. Such programs, including TANF, SNAP (food stamps), and the Earned Income Tax Credit (EITC), have been tested during and between recessions of the past 30 years, including the recent 2007-2009 Great Recession. I use matched data in the March Current Population Survey (CPS) from 1980 to 2012 to estimate pre- and post-transfer income instability over the 1980s, 1990s, and 2000s, as well as across recessions. The results are disaggregated by family structure, race, income, and education. Transfer programs are associated with lowered instability levels and flatter trend growth from 1980 to 2012 among socioeconomically disadvantaged subgroups, while the tax system reduces income instability for families in the top 40th percentile of the income distribution. Although the largest instability reductions occur among the poor, since 1980 the safety net appears less responsive to instability for the bottom income quintile, female-headed families, and black families.
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Ingrid Ellen, Keren Horn & Katherine O'Regan
Journal of Housing Economics, December 2016, Pages 49-59
Abstract:
New evidence on the effects of growing up in neighborhoods of concentrated poverty has heightened policy interest in understanding the role housing programs may play in shaping the distribution of poverty. In particular, as the nation's largest source of funding for the construction of affordable rental housing, the Low Income Housing Tax Credit (LIHTC) could play a critical role in shaping the distribution of poverty. This paper examines whether the LIHTC affects the concentration of poverty by examining who lives in tax credit developments in different neighborhoods, and how neighborhoods and metropolitan areas change after LIHTC developments are built. Through assessing both the effects of siting and tenant composition, we find little evidence that the LIHTC is increasing the concentration of poverty - and we find some evidence that it is reducing poverty rates in high-poverty neighborhoods. We also make suggestions for states who want to use LIHTC to do more to deconcentrate poverty.
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Welfare Reform and the Intergenerational Transmission of Dependence
Robert Paul Hartley, Carlos Lamarche & James Ziliak
University of Kentucky Working Paper, August 2016
Abstract:
We estimate the effect of welfare reform on the intergenerational transmission of welfare participation using a long panel of mother-daughter pairs over the survey period 1968-2013 in the Panel Study of Income Dynamics. Because states implemented welfare reform at different times starting in 1992, the cross-state over time variation permits us to quasi-experimentally separate out the effect of mothers' participation on daughters' welfare choice in the pre- and post-welfare reform periods. Our empirical framework also addresses potential biases in identifying a causal pathway from parent to child that arise from correlated unobservables in welfare decisions, misclassification error in survey reports, life-cycle differences in measuring the parent and child's age of welfare usage, and cross-state mobility. Our instrumental variables estimates show that a mother's welfare participation increased her daughter's odds of participation as an adult by about 40 percentage points, but that welfare reform attenuated this transmission by at least 50 percent, or about 30 percent of the baseline odds of participation. However, when we broaden the definition of welfare received by the daughter to also include assistance from means-tested food or disability assistance, then the transmission from mother to daughter does not substantively change after welfare reform. This seems to be a consequence of persistence in intergenerational poverty status.