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Monday, January 28, 2013

Poverty line

 

Winning the War: Poverty from the Great Society to the Great Recession

Bruce Meyer & James Sullivan
NBER Working Paper, January 2013

Abstract:
This paper considers the long-run patterns of poverty in the United States from the early 1960s to 2010. Our results contradict previous studies that have argued that poverty has shown little improvement over time or that anti-poverty efforts have been ineffective. We find that moving from traditional income-based measures of poverty to a consumption-based measure (which we argue is superior on both theoretical and practical grounds) and, crucially, adjusting for bias in price indices leads to the conclusion that the poverty rate declined by 26.4 percentage points between 1960 and 2010, with 8.5 percentage points of that decline occurring since 1980. Consumption poverty suggests considerably greater improvement than income poverty for single parent families and the aged, but relatively less improvement for married parent families. Our analyses of the proximate causes of these patterns indicate that changes in tax policy explain a substantial part of the decline in poverty and that social security has been important, but that the roles of other transfer programs have been small. Changes in education have contributed to the decline, while other demographic trends have played a small role. Measurement error in income is likely to explain some of the most noticeable differences between changes in income and consumption poverty, but saving and dissaving do not appear to play a large role for most demographic groups.

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The Age Structure of Contemporary Homelessness: Evidence and Implications For Public Policy

Dennis Culhane et al.
Analyses of Social Issues and Public Policy, forthcoming

Abstract:
Amidst concern about the implications of an aging U.S. population, recent evidence suggests that there is a unique aging trend among the homeless population. Building on this, we use data from New York City and from the last three decennial Census enumerations to assess how the age composition of the homeless population - both single adults and adults in families - has changed over time. Findings show diverging trends in aging patterns for single adults and adults in families over the past 20 years. Among single adults, the bulk of the sheltered population is comprised of persons born during the latter part of the baby boom era whose high risk for homelessness has continued as they have aged. Specifically, the age group in this population facing the highest risk for homelessness was 34-36 (born 1954-1956) in 1990; 37-42 (born 1958-1963) in 2000; and 49-51 (born 1959-1961) in 2010. In contrast, among adults in sheltered families, there is no indication of any progressive aging of the family household heads. The modal age across the study period remains at 21-23 years of age. We consider implications for the health care and social welfare systems, and policy responses to homelessness.

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Identifying the Effects of SNAP (Food Stamps) on Child Health Outcomes When Participation Is Endogenous and Misreported

Brent Kreider et al.
Journal of the American Statistical Association, Fall 2012, Pages 958-975

Abstract:
The literature assessing the efficacy of the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, has long puzzled over positive associations between SNAP receipt and various undesirable health outcomes such as food insecurity. Assessing the causal impacts of SNAP, however, is hampered by two key identification problems: endogenous selection into participation and extensive systematic underreporting of participation status. Using data from the National Health and Nutrition Examination Survey (NHANES), we extend partial identification bounding methods to account for these two identification problems in a single unifying framework. Specifically, we derive informative bounds on the average treatment effect (ATE) of SNAP on child food insecurity, poor general health, obesity, and anemia across a range of different assumptions used to address the selection and classification error problems. In particular, to address the selection problem, we apply relatively weak nonparametric assumptions on the latent outcomes, selected treatments, and observed covariates. To address the classification error problem, we formalize a new approach that uses auxiliary administrative data on the size of the SNAP caseload to restrict the magnitudes and patterns of SNAP reporting errors. Layering successively stronger assumptions, an objective of our analysis is to make transparent how the strength of the conclusions varies with the strength of the identifying assumptions. Under the weakest restrictions, there is substantial ambiguity; we cannot rule out the possibility that SNAP increases or decreases poor health. Under stronger but plausible assumptions used to address the selection and classification error problems, we find that commonly cited relationships between SNAP and poor health outcomes provide a misleading picture about the true impacts of the program. Our tightest bounds identify favorable impacts of SNAP on child health.

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Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater?

David Neumark, Ian Salas & William Wascher
NBER Working Paper, January 2013

Abstract:
We revisit the minimum wage-employment debate, which is as old as the Department of Labor. In particular, we assess new studies claiming that the standard panel data approach used in much of the "new minimum wage research" is flawed because it fails to account for spatial heterogeneity. These new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the United States have not reduced employment. We explore the ability of these research designs to isolate reliable identifying information and test the untested assumptions in this new research about the construction of better control groups. Our evidence points to serious problems with these research designs. We conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.

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Natural Resource Curse and Poverty in Appalachian America

Mark Partridge, Michael Betz & Linda Lobao
American Journal of Agricultural Economics, January 2013, Pages 449-456

"Coal mining has long been associated with higher poverty in Appalachia, consistent with a natural resources curse. This study reassessed coal mining's link to poverty in Appalachia, including the more modern influence of MTM [mountain-top mining], with its broader environmental footprint. We find that coal's positive association with poverty changed to a negative association post-2000. Moreover, we find weak evidence that MTM is now associated with lower poverty, though we are careful not to claim that this is a permanent effect. Hence, we tentatively conclude that there may be a reversal in coal mining's natural resource curse in Appalachia."

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The Logic of Pro-Poor Policymaking: Political Entrepreneurship and Mass Education

Stephen Kosack
British Journal of Political Science, forthcoming

Abstract:
This article argues against the scholarly consensus that governments make pro-poor policies when they are democratic. In democracies and autocracies, a government's strongest incentive is to serve citizens who are organized, and poor citizens face collective-action disadvantages. But a ‘political entrepreneur' can help poor citizens organize and attain power with their support; to stay in power, the political entrepreneur's incentive is to maintain poor citizens' support with pro-poor policies. Politics and education are analyzed over half-a-century in countries with little in common - Ghana, Taiwan, and Brazil. Governments that expanded education for the poor were more often autocratic than democratic, but were always clearly associated with political entrepreneurs. The results suggest an alternative understanding of government incentives to serve poor citizens.

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Poverty and Self-Control

Douglas Bernheim, Debraj Ray & Sevin Yeltekin
NBER Working Paper, January 2013

Abstract:
The absence of self-control is often viewed as an important correlate of persistent poverty. Using a standard intertemporal allocation problem with credit constraints faced by an individual with quasi- hyperbolic preferences, we argue that poverty damages the ability to exercise self-control. Our theory invokes George Ainslie's notion of "personal rules," interpreted as subgame-perfect equilibria of an intrapersonal game played by a time-inconsistent decision maker. Our main result pertains to situations in which the individual is neither so patient that accumulation is possible from every asset level, nor so impatient that decumulation is unavoidable from every asset level. Such cases always possess a threshold level of assets above which personal rules support unbounded accumulation, and a second threshold below which there is a "poverty trap": no personal rule permits the individual to avoid depleting all liquid wealth. In short, poverty perpetuates itself by undermining the ability to exercise self-control. Thus even temporary policies designed to help the poor accumulate assets may be highly effective. We also explore the implications for saving with easier access to credit, the demand for commitment devices, the design of accounts to promote saving, and the variation of the marginal propensity to consume across classes of resource claims.

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Macroeconomic Environment During Infancy as a Possible Risk Factor for Adolescent Behavioral Problems

Seethalakshmi Ramanathan, Natarajan Balasubramanian & Rajeev Krishnadas
Archives of General Psychiatry, forthcoming

Context: Economic difficulties at the individual level can lead to a number of behavioral problems, including substance abuse and delinquent behaviors.

Objective: To examine the influence of a nationwide adverse economic environment during infancy, specifically, the high unemployment rates during and after the 1980 and 1981-1982 recessions, on rates of subsequent adolescent substance use and delinquent behaviors.

Design: We used data from the National Longitudinal Survey of Youth 1997 and estimated logit regressions to examine the effect of changes in unemployment rates during infancy on the incidence of adolescent behavioral problems, controlling for known youth, family, and environmental risk factors.

Setting: Adolescents living in the United States in 1997.

Participants: Nationally representative sample of 8984 adolescents born from January 1, 1980, through December 31, 1984.

Main Outcome Measures: Probability of engaging in substance use (marijuana, smoking, alcohol, and hard [ie, illegal] drugs) and delinquent behaviors (arrest, handgun use, gang affiliation, petty and major theft, property destruction, and assaultive behavior).

Results: Exposure to a 1% deviation from mean regional unemployment rates at the age of 1 year was associated with an increase in the odds ratios of engaging in marijuana use (1.09 [95% CI, 1.04-1.14]), smoking (1.07 [1.03-1.11]), alcohol use (1.06 [1.02-1.10]), arrest (1.17 [1.09-1.25]), gang affiliation (1.09 [1.00-1.19]), and petty (1.06 [1.01-1.10]) and major theft (1.11 [1.05-1.18]). No significant associations were noted with use of hard drugs, property destruction, and assaultive behavior.

Conclusions: The macroeconomic environment during infancy can have serious long-term effects on substance use and delinquent behavior. These potential long-term effects can play an important role in policy making for adolescent mental health care.

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Relations Between Housing Characteristics and the Well-Being of Low-Income Children and Adolescents

Rebekah Levine Coley et al.
Developmental Psychology, forthcoming

Abstract:
Extant research has highlighted the importance of multiple characteristics of housing but has not comprehensively assessed a broad range of housing characteristics and their relative contributions to children's well-being. Using a representative, longitudinal sample of low-income children and adolescents from low-income urban neighborhoods (N = 2,437, ages 2-21 years) from the Three-City Study, this study assessed housing quality, stability, type (i.e., ownership status and subsidy status), and cost simultaneously to delineate their unique associations with children's development. Hierarchical linear models found that poor housing quality was most consistently associated with children's and adolescents' development, including worse emotional and behavioral functioning and lower cognitive skills. These associations operated in part through mothers' psychological functioning. Residential instability showed mixed links with functioning, whereas housing cost and type were not consistently predictive. Results suggest that housing contexts are associated with functioning across the developmental span from early childhood through late adolescence, with some differences in patterns by child age.

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Happiness among the garbage: Differences in overall happiness among trash pickers in León (Nicaragua)

José Juan Vázquez
Journal of Positive Psychology, January/February 2013, Pages 1-11

Abstract:
This article analyzes various aspects related to overall happiness expressed by 99 people who make their living in the dumps of León (Nicaragua) - a group that is difficult to access, heavily stigmatized, and living in extreme poverty. We interviewed all the people living from the garbage in the city of León using a heteroapplied structured interview. In order to gather information on overall happiness, we used an instrument that combined illustrations with explanations by the interviewers. The results show that people in León who make their living by collecting rubbish state that they are happy, have optimistic expectations regarding their future, and show a lack of any relationship between overall happiness and income. The respondents appear to obtain their main sources of happiness in areas of their lives other than the economic and labor spheres, and mainly from areas related to their social and leisure activities.

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Long-Term Impacts of Individual Development Accounts on Homeownership among Baseline Renters: Follow-Up Evidence from a Randomized Experiment

Michal Grinstein-Weiss et al.
American Economic Journal: Economic Policy, February 2013, Pages 122-145

Abstract:
We examine the long-term effects of a 1998-2003 randomized experiment in Tulsa, Oklahoma with Individual Development Accounts that offered low-income households 2:1 matching funds for housing down payments. Prior work shows that, among households who rented in 1998, homeownership rates increased more through 2003 in the treatment group than for controls. We show that control group renters caught up rapidly with the treatment group after the experiment ended. As of 2009, the program had an economically small and statistically insignificant effect on homeownership rates, the number of years respondents owned homes, home equity, and foreclosure activity among baseline renters.

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Long-Term Effects of Individual Development Accounts on Postsecondary Education: Follow-up Evidence from a Randomized Experiment

Michal Grinstein-Weiss et al.
Economics of Education Review, forthcoming

Abstract:
This paper presents evidence from a randomized field experiment testing the impact of a 3-year matched savings program on educational outcomes 10 years after the start of the experiment. We examine the effect of an Individual Development Account (IDA) program on: (1) educational enrollment; (2) degree completion; and (3) increased education level. The IDA program, which ran from 1998 to 2003 in Tulsa, Oklahoma, provided low-income households with financial education and matching funds for qualified savings withdrawals, including a 1:1 match for educational uses. We find a significant impact on education enrollment and positive (but non-significant) impacts on degree completion and increase in level of education. We also examine the interaction between gender and treatment assignment, finding that the IDA had a strong positive effect on increased educational attainment for men but not for women.

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Onset and Offset Deservingness: The Case of Home Foreclosures

Mark Brandt
Political Psychology, forthcoming

Abstract:
An examination of the debate surrounding foreclosure assistance suggests that arguments vary in the extent that they suggest people facing foreclosure deserve assistance and whether the cause of the foreclosure is at the onset or offset of the foreclosure situation. Results from an experiment using a nationally representative sample suggest that people use the attributional evidence provided by onset- and offset-deservingness scenarios to determine their support for governmental and personal foreclosure assistance. Consistent with attribution theory, path analysis suggested that attributions of controllability and the associated emotions of anger and sympathy mediated the relationship between deservingness arguments and support for foreclosure assistance. Additionally, people who endorse conservatism were more likely to oppose foreclosure assistance. Ideological differences in perceived controllability, anger, and sympathy mediated the relationship between ideology and personal assistance and partially mediated the relationship between ideology and government assistance.

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The Role of Race and Birth Place in Welfare Usage among Comparable Women: Evidence from the U.S.

Ruth Uwaifo Oyelere & Maharouf Oyolola
Review of Black Political Economy, September 2012, Pages 285-297

Abstract:
There is evidence that women are more likely to live in poverty than men. Given the fact that the poor are more likely to use welfare, it becomes useful to consider welfare usage among women. A-priori welfare programs are set up in such a way that welfare usage should be based primarily on economic needs and health concerns. However, it is possible that an individual's experiences could affect their perception and inclination for using government assistance. In this scenario, differences in welfare usage will exist for individuals with similar characteristics but different experiences. We explore this possibility among women and investigate if race/ethnicity and birthplace still have a role to play in the decision to use welfare even after controlling for income, health and other demographic factors like employment and household size, which are typical predictors of welfare usage. We find that race does not matter for welfare usage among comparable women. In addition, we do not find significant differences in welfare usage among women based on birthplace - suggesting that comparable naturalized and native born women share similar inclination for welfare.

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Money Buys Financial Security and Psychological Need Satisfaction: Testing Need Theory in Affluence

Ryan Howell, Mark Kurai & Leona Tam
Social Indicators Research, January 2013, Pages 17-29

Abstract:
The most prominent theory to explain the curvilinear relationship between income and subjective well-being (SWB) is need theory, which proposes that increased income and wealth can lead to increased well-being in poverty because money is used to satisfy basic physiological needs. The present study tests the tenets of need theory by proposing that money can buy happiness beyond poverty if the money satisfies higher-order needs. Findings indicate that in older adults (n = 1,284), as economic standing rises, so do individual perceptions of financial security (a safety need), which in turn increases overall life satisfaction. Further, a path model tested the degree to which financial security and psychological need satisfaction mediated the path from economic standing to life satisfaction and demonstrated the complete mediation through higher-order needs - there was a 66% reduction in the direct link through financial security and a 34% reduction through psychological need satisfaction. Discussion focuses on how these mediation and path models extend need theory.

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‘I am not alone': Understanding public support for the welfare state

Klarita Gërxhani & Ferry Koster
International Sociology, November 2012, Pages 768-787

Abstract:
This article explores to what extent and how individuals' welfare state attitudes relate to their subjective assessment of the available social support. Using various sociological and sociopsychological theories the authors first provide a theoretical analysis of the micro-macro links between perceived social support (micro), social trust in support availability (macro) and public attitudes towards welfare states (micro). An empirical test based on a large cross-country dataset of 31,122 respondents in 25 European countries shows that the more welfare is provided by the state, the less of it is desired in countries where individuals have the general belief that they can rely on each other for support. Importantly, only when considered jointly, do welfare state provision and social trust in support availability become essential in explaining welfare state attitudes.

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Social security claiming decision of married men and widow poverty

Steven Sass, Wei Sun & Anthony Webb
Economics Letters, forthcoming

Abstract:
We find most husbands claim Social Security before the ages that maximize the expected present value of their benefits. Although household benefits are only slightly reduced, the EPV of widows' benefits reduces by 17.7 percent, increasing their risk of poverty.

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Promoting the Positive Development of Boys in High-Poverty Neighborhoods: Evidence From Four Anti-Poverty Experiments

Emily Snell et al.
Journal of Research on Adolescence, forthcoming

Abstract:
This study uses geocoded address data and information about parents' economic behavior and children's development from four random-assignment welfare and anti-poverty experiments conducted during the 1990s. We find that the impacts of these welfare and anti-poverty programs on boys' and girls' developmental outcomes during the transition to early adolescence differ as a function of neighborhood poverty levels. The strongest positive impacts of these programs are among boys who lived in high-poverty neighborhoods at the time their parents enrolled in the studies, with smaller or nonstatistically significant effects for boys in lower-poverty neighborhoods and for girls across all neighborhoods. This research informs our understanding of how neighborhood context and child gender may interact with employment-based policies to affect children's well-being.

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Can higher employment levels bring down relative income poverty in the EU? Regression-based simulations of the Europe 2020 target

Ive Marx, Pieter Vandenbroucke & Gerlinde Verbist
Journal of European Social Policy, December 2012, Pages 472-486

Abstract:
At the European level and in most EU member states, higher employment levels are seen as key to better poverty outcomes. What can we expect the actual impact to be, however? Up until now shift-share analysis has been used to estimate the impact of rising employment on relative income poverty. This method has serious limitations. We propose a more sophisticated simulation model that builds on regression-based estimates of employment probabilities and wages. We use this model to estimate the impact on relative income poverty of moving towards the Europe 2020 target of 75 percent of the working-age population in work. Two sensitivity checks are included: giving priority in job allocation to jobless households and imputing low instead of estimated wages. This article shows that employment growth does not necessarily result in lower relative poverty shares, a result that is largely consistent with observed outcomes over the past decade.

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Can income support for part-time workers serve as a stepping-stone to regular jobs? An application to young long-term unemployed women

Bart Cockx, Christian Goebel & Stéphane Robin
Empirical Economics, February 2013, Pages 189-229

Abstract:
This article investigates whether income support for low-paid part-time workers in Belgium increases the transition from unemployment to non-subsidised, ‘regular' employment. Our analysis uses a sample of long-term unemployed young women. Observing their labour market histories from 1998 to 2001, we implement the ‘timing of events' method to identify the treatment effect. Our results suggest that participation in the policy has a significantly positive effect on the transition to regular employment. Participation reduced the survivor rate in unemployment by 27% points 1 year after the start of the programme. The time spent in the programme did not affect the transition to regular employment.

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Making Ends Meet During the Great Recession: How Child Care Subsidies Matter to Low-Wage Workers

Ellen Scott & Ann Shirley Leymon
Journal of Poverty, Winter 2013, Pages 63-85

Abstract:
In the last 15 years, the triumph of neoliberal politics in the United States has been marked in part by the end of welfare "as we knew it" and the long-coming disappearance of the family wage. Remnants remain, such as work supports like child care assistance. In the current context of high unemployment, legislators are debating eliminating child care subsidies. To understand recent employment experiences and the effects of subsidies on the employment of less educated single mothers, the authors conducted in-depth interviews with recipients of child care subsidies in Oregon and found that the subsidies were imperative to their employment.

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Lone parents, poverty and policy in the European Union

Yekaterina Chzhen & Jonathan Bradshaw
Journal of European Social Policy, December 2012, Pages 487-506

Abstract:
Although there is considerable research evidence to show that children in lone parent families are at increased risk of poverty, there have been few comparative analyses of lone parents in Europe. Using the EU Statistics on Income and Living Conditions (EU-SILC) 2009, this paper compares the prevalence and characteristics of lone parent families, analyses the poverty and deprivation risks of children, and evaluates the potential impact of social transfer income packages on child poverty reduction. We use the unique personal identifiers of mothers, fathers and partners to define lone parent families with greater precision. Using a multi-level framework, we find lower child poverty rates in countries with more generous social transfers, even after controlling for the country standard of living. A reverse pattern is observed for material deprivation: the negative effect of social transfer income washes out when the GDP per capita is controlled for, which itself has a negative and significant effect on material deprivation.

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Financial Knowledge and Child Development Account Policy: A Test of Financial Capability

Jin Huang, Yunju Nam & Margaret Sherraden
Journal of Consumer Affairs, forthcoming

Abstract:
This study examines how study participants' financial knowledge and participation in a Child Development Account intervention affects 529 College Savings Plan account holding among caregivers of infants. The study uses data from the SEED for Oklahoma Kids (N = 2,651), a statewide randomized experiment using a probability sample of infants selected from birth records. Results of logit regression show that participants' financial knowledge is positively related to account holding in the treatment group but not in the control group. The interactive effects between financial knowledge and treatment status are statistically significant. This finding implies that the effect of financial knowledge on financial decisions related to college savings is moderated by institutional features, such as incentives, information and access. Results of this study support the propositions of financial capability and suggest that expanding financial capability requires both improved individual financial knowledge and supportive policy.

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Developmental Changes in Impacts of an Antipoverty Experiment on Low-Income Children's Structured Out-of-School Time

Sylvia Epps, Aletha Huston & Kaeley Bobbitt
Developmental Psychology, forthcoming

Abstract:
The experiment reported here tested impacts of New Hope, an employment-based poverty intervention for adults on developmental patterns of children's participation in structured out-of-school activities, using a cross-sequential design spanning ages 6 through 19. New Hope increased participation in activities (lessons, sports, religious, clubs, community centers, service). Its effects did not vary significantly across age, time of measurement, or gender, lasting well beyond parents' eligibility for program benefits. Overall participation peaked in early adolescence, declining thereafter. Policies that enhance participation during middle childhood may have long-term benefits because structured activities can provide opportunities for skill development and adult supervision that may be especially useful for children from low-income families.

By KEVIN LEWIS | 09:00:00 AM