Findings

Bankrupt

Kevin Lewis

August 18, 2019

Food Stamps and America's Poorest
Dean Jolliffe, Juan Margitic & Martin Ravallion
NBER Working Paper, June 2019

Abstract:
The paper provides the first assessment of: (i) America’s progress in lifting the lower bound — the floor — of the distribution of real income; (ii) whether the country’s largest antipoverty program, SNAP (“food stamps”), helped do so. An operational method of estimating the floor is implemented on micro survey data spanning 30 years, with various robustness and significance tests. SNAP partially compensated the poorest, and helped stabilize the floor. Nonetheless, the floor has been sinking over the last 30 years. The efficiency of SNAP in lifting the floor has declined over time. Full coverage of the poorest would lift the floor appreciably.


Does Eviction Cause Poverty? Quasi-Experimental Evidence from Cook County, IL
John Eric Humphries et al.
NBER Working Paper, August 2019

Abstract:
Each year, more than two million U.S. households have an eviction case filed against them. Many cities have recently implemented policies aimed at reducing the number of evictions, motivated by research showing strong associations between being evicted and subsequent adverse economic outcomes. Yet it is difficult to determine to what extent those associations represent causal relationships, because eviction itself is likely to be a consequence of adverse life events. This paper addresses that challenge and offers new causal evidence on how eviction affects financial distress, residential mobility, and neighborhood quality. We collect the near-universe of Cook County court records over a period of seventeen years, and link these records to credit bureau and payday loans data. Using this data, we characterize the trajectory of financial strain in the run-up and aftermath of eviction court for both evicted and non-evicted households, finding high levels and striking increases in financial strain in the years before an eviction case is filed. Guided by this descriptive evidence, we employ two approaches to draw causal inference on the effect of eviction. The first takes advantage of the panel data through a difference-in-differences design. The second is an instrumental variables strategy, relying on the fact that court cases are randomly assigned to judges of varying leniency. We find that eviction negatively impacts credit access and durable consumption for several years. However, the effects are small relative to the financial strain experienced by both evicted and non-evicted tenants in the run-up to an eviction filing.


Do Minimum Wage Increases Benefit Intended Households? Evidence from the Performance of Residential Leases
Sumit Agarwal, Brent Ambrose & Moussa Diop
Federal Reserve Working Paper, July 2019

Abstract:
Prior studies debating the effects of changes to the minimum wage concentrate on impacts on household income and spending or employment. We extend this debate by examining the impact of changes to the minimum wage on expenses associated with shelter, a previously unexplored area. Increases in state minimum wages significantly reduce the incidence of renters defaulting on their lease contracts by 1.29 percentage points over three months, relative to similar renters who did not experience an increase in the minimum wage. This represents 25.7% fewer defaults post treatment in treated states. To put this into perspective, a 1% increase in minimum wage translates into a 2.6% decrease in rental default. This evidence is consistent with wage increases having an immediate impact on relaxing renter budget constraints. However, this effect slowly decreases over time as landlords react to wage increases by increasing rents. Our analysis is based on a unique data set that tracks household rental payments.


Periodic Earned Income Tax Credit (EITC) Payment, Financial Stress and Wellbeing: A Longitudinal Study
Karen Kramer et al.
Journal of Family and Economic Issues, September 2019, Pages 511–523

Abstract:
The Earned Income Tax Credit (EITC) addresses the economic needs of low-income families, but its annual distribution in one lump-sum limits recipients’ ability to handle financial emergencies that arise throughout the year. We examine the relationship between an advanced periodic payment of the EITC and recipients’ wellbeing. We compare the perceived financial stress of recipients receiving a traditional lump-sum payment to a group that received four advanced payments spread throughout the year. Periodic payment recipients experienced significantly lower levels of perceived financial stress. This relationship was partly mediated by less need to borrow money, lower levels of food insecurity, and fewer unpaid bills. Therefore, periodic payments may enhance the positive association between the EITC and the financial wellbeing of families.


The Effect of SNAP on the Composition of Purchased Foods: Evidence and Implications
Justine Hastings, Ryan Kessler & Jesse Shapiro
NBER Working Paper, June 2019

Abstract:
We use detailed data from a large retail panel to study the effect of participation in the Supplemental Nutrition Assistance Program (SNAP) on the composition and nutrient content of foods purchased for at-home consumption. We find that the effect of SNAP participation is small relative to the cross-sectional variation in most of the outcomes we consider. Estimates from a model relating the composition of a household’s food purchases to the household’s current level of food spending imply that closing the gap in food spending between high- and low-SES households would not close the gap in summary measures of food healthfulness.


The Effect of the Earned Income Tax Credit on Housing and Living Arrangements
Natasha Pilkauskas & Katherine Michelmore
Demography, August 2019, Pages 1303–1326

Abstract:
As rents have risen and wages have not kept pace, housing affordability in the United States has declined over the last 15 years, impacting the housing and living arrangements of low-income families. Housing subsidies improve the housing situations of low-income families, but less than one in four eligible families receive a voucher. In this article, we analyze whether one of the largest anti-poverty programs in the United States — the Earned Income Tax Credit (EITC) — affects the housing (eviction, homelessness, and affordability) and living arrangements (doubling up, number of people in the household, and crowding) of low-income families. Using the Current Population Survey, the American Community Survey/decennial census, and the Fragile Families and Child Wellbeing Study, we employ a parameterized difference-in-differences strategy to examine whether policy-induced expansions to the EITC affect the housing and living arrangements of single mothers. Results suggest that a $1,000 increase in the EITC improves housing by reducing housing cost burdens, but it has no effect on eviction or homelessness. Increases in the EITC also reduce doubling up (living with additional, nonnuclear family adults) — in particular, doubling up in someone else’s home — and reduce three-generation/multigenerational coresidence, suggesting that mothers have a preference to live independently. We find weak evidence for a reduction in overall household size, yet the EITC does reduce household crowding. Although the EITC is not an explicit housing policy, expansions to the EITC are generally linked with improved housing outcomes for single mothers and their children.


Association of Revised WIC Food Package With Perinatal and Birth Outcomes: A Quasi-Experimental Study
Rita Hamad et al.
JAMA Pediatrics, forthcoming

Importance: The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) serves more than one-quarter of pregnant and postpartum women. In October 2009, the WIC food package underwent revisions to improve nutritional content. No studies have investigated the downstream effects of this revision on maternal and infant health.

Design, Setting, and Participants: We conducted a quasi-experimental difference-in-differences analysis, comparing WIC recipients (the treatment group) before and after the package revisions while accounting for temporal trends among nonrecipients (the control group). Multivariable linear regressions were adjusted for sociodemographic covariates. This study was conducted using linked birth certificate and hospital discharge data from California from January 2007 to December 2012. Analysis began July 2018.

Results: The sample included 2 897 537 infants born to 2 441 658 mothers. WIC recipients were more likely to be Hispanic, less educated, of greater parity, and younger than nonrecipients. The revised WIC food package was associated with reductions in maternal preeclampsia (−0.6% points; 95% CI, −0.8 to −0.4) and more than recommended gestational weight gain (−3.2% points; 95% CI, −3.6 to −2.7), increased likelihood of as recommended (2.3% points; 95% CI, 1.8 to 2.8) and less than recommended (0.9% points; 95% CI, 0.5 to 1.2) gestational weight gain, and longer gestational age (0.2 weeks; 95% CI, 0.001 to 0.034). Among infants, an increased likelihood of birth weight that was appropriate for gestational age was observed (0.9% points; 95% CI, 0.5 to 1.3). Although birth weight itself was reduced (−0.009 SDs; 95% CI, −0.016 to −0.001), this was accompanied by reductions in small for gestational age (−0.4% points; 95% CI, −0.7 to −0.1), large for gestational age (−0.5% points; 95% CI, −0.8 to −0.2), and low-birth-weight infants (−0.2% points; 95% CI, −0.4 to −0.004), suggesting that the revised food package improved distributions of birth weight.


Waiting for Affordable Housing in New York City
Holger Sieg & Chamna Yoon
NBER Working Paper, June 2019

Abstract:
We develop a new dynamic equilibrium model with heterogeneous households that captures the most important frictions that arise in housing rental markets and explains the political popularity of affordable housing policies. We estimate the model using data collected by the New York Housing Vacancy Survey in 2011. We find that there are significant adjustment costs in all markets as well as serious search frictions in the market for affordable housing. Moreover, there are large queuing frictions in the market for public housing. Having access to rent-stabilized housing increases household welfare by up to $65,000. Increasing the supply of affordable housing by ten percent significantly improves the welfare of all renters in the city. Progressive taxation of higher-income households that live in public housing can also be welfare improving.


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