The Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data
Kevin Rinz & John Voorheis
U.S. Census Bureau Working Paper, March 2018
States and localities are increasingly experimenting with higher minimum wages in response to rising income inequality and stagnant economic mobility, but commonly used public datasets offer limited opportunities to evaluate the extent to which such changes affect earnings growth. We use administrative earnings data from the Social Security Administration linked to the Current Population Survey to overcome important limitations of public data and estimate effects of the minimum wage on growth incidence curves and income mobility profiles, providing insight into how cross-sectional effects of the minimum wage on earnings persist over time. Under both approaches, we find that raising the minimum wage increases earnings growth at the bottom of the distribution, and those effects persist and indeed grow in magnitude over several years. This finding is robust to a variety of specifications, including alternatives commonly used in the literature on employment effects of the minimum wage. Instrumental variables and subsample analyses indicate that geographic mobility likely contributes to the effects we identify. Extrapolating from our estimates suggests that a minimum wage increase comparable in magnitude to the increase experienced in Seattle between 2013 and 2016 would have blunted some, but not nearly all of the worst income losses suffered at the bottom of the income distribution during the Great Recession.
The Long-Term Impact of the Earned Income Tax Credit on Children’s Education and Employment Outcomes
Katherine Michelmore & Jacob Bastian
Journal of Labor Economics, forthcoming
Using four decades of variation in the federal and state Earned Income Tax Credit, we estimate the impact of exposure to EITC expansions in childhood on education and employment outcomes in adulthood. Reduced-form results suggest that an additional $1,000 in EITC exposure when a child is 13 to 18 years old increases the likelihood of completing high school (1.3 percent), completing college (4.2 percent), being employed as a young adult (1.0 percent), and earnings by 2.2 percent. Our analysis reveals that the primary channel through which the EITC improves these outcomes is via increases in pre-tax family earnings.
Does the Earned Income Tax Credit Increase Children's Weight? The Impact of Policy‐Driven Income on Childhood Obesity
Health Economics, forthcoming
I exploit substantial increases in the earned income tax credit to study how a policy‐driven change in family income affects childhood obesity. Using the National Longitudinal Survey of Youth 1979, my difference‐in‐differences estimates indicate that the probability of being obese increased by 3 percentage points among children whose families experienced a greater income shock. A further investigation suggests that a reduction in maternal time with children played a greater role in children's weight gain than income. The paper's finding shows that a program that is not designed for health purposes, such as earned income tax credit, can have unintended effects on health outcomes.
Family Labor Supply and the Timing of Cash Transfers: Evidence from the Earned Income Tax Credit
Journal of Human Resources, Spring 2018, Pages 445-473
This paper exploits the unique disbursement timing and benefit rules of the Earned Income Tax Credit (EITC) to provide new evidence on how families adjust their labor supply in response to receiving anticipated cash transfers. I find that income seasonality caused by EITC receipt leads to changes in the intra-year labor supply patterns of married women. On average, receiving a $1,000 payment significantly reduces the proportion of married women who work, by 1.3 percentage points, in the month when the EITC is received. Additionally, this labor supply response is mainly driven by those who are secondary earners or liquidity-constrained.
Minimum Wage Analysis Using a Pre-Committed Research Design: Evidence through 2016
Jeffrey Clemens & Michael Strain
University of California Working Paper, March 2018
This paper presents results from the first year of a multi-year, pre-committed research design for analyzing recent state-level minimum wage changes. Through 2015 and 2016, we estimate that relatively large statutory minimum wage increases have reduced employment among low-skilled population groups by just under 1.5 percentage points. Our estimates of the effects of smaller minimum wage increases are more variable and include both moderately large positive values and modest negative values. Our estimates of the effects of increases linked to inflation-indexing provisions are also quite variable, taking a small positive value on average across specifications. Results including 2016 diverge nontrivially when we compare estimates using the American Community Survey (ACS) to estimates using the Current Population Survey (CPS), with estimates tending to be more negative in the ACS. Analysis of future data will be needed to determine whether this difference across surveys is most appropriately attributed to sampling variations or to some other cause.
Housing Interventions and the Chronic and Acute Risks of Family Homelessness: Experimental Evidence for Education
J.J. Cutuli & Janette Herbers
Child Development, forthcoming
This study considers risk associated with family homelessness for school functioning and experimental evidence on the effects of different housing interventions over time. Students in homeless families (N = 172; Mage = 7.31; SD = 4.15) were randomized to housing interventions that focus on acute risks (community-based rapid rehousing), chronic risks (permanent subsidy), or usual care (UC). A matched group of low-income, housed students served as an additional reference for effects on attendance, school mobility, and reading and math achievement across 4 years. Findings partially support the chronic-risk hypothesis that family homelessness interferes with achievement through its relation to deep poverty. Children randomly assigned to UC perform as well or better than children assigned to housing interventions in this municipality.
Marriage, Labor Supply and the Dynamics of the Social Safety Net
Hamish Low et al.
NBER Working Paper, February 2018
The 1996 PRWORA reform introduced time limits on the receipt of welfare in the United States. We use variation by state and across demographic groups to provide reduced form evidence showing that such limits led to a fall in welfare claims (partly due to “banking” benefits for future use), a rise in employment, and a decline in divorce rates. We then specify and estimate a life-cycle model of marriage, labor supply and divorce under limited commitment to better understand the mechanisms behind these behavioral responses, carry out counterfactual analysis with longer run impacts and evaluate the welfare effects of the program. Based on the model, which reproduces the reduced form estimates, we show that among low educated women, instead of relying on TANF, single mothers work more, more mothers remain married, some move to relying only on food stamps and, in ex-ante welfare terms, women are worse off.
The Receipt of Government Food Assistance: Differences Between Metro and Non-Metro Households
Robert Nielsen, Martin Seay & Melissa Wilmarth
Journal of Family and Economic Issues, March 2018, Pages 117-131
This research investigated differences in households’ receipt of government food assistance through such programs as the Supplemental Nutrition Assistance Program; Special Supplemental Nutrition Program for Women, Infants, and Children; free and reduced school meals; and related local and/or federal programs. With panel data from the Survey of Income and Program Participation that span the Great Recession, differences in the receipt of government food assistance in metro and non-metro areas were identified. Longitudinal random effects models suggest that despite relatively similar levels of food insecurity in 2005 and 2010, a higher proportion of non-metro households received government food assistance. Results also suggest that this assistance gap widened post-recession when government resources were expanded. These results inform a continuing debate about the efficient allocation of resources intended to reduce food hardship disparities, and increase family economic well-being, in metro and non-metro areas.
How Do Changes in Housing Voucher Design Affect Rent and Neighborhood Quality?
Robert Collinson & Peter Ganong
University of Chicago Working Paper, June 2017
U.S. housing voucher holders pay their landlord a fraction of household income and the government pays the rest, up to a rent ceiling. We study how two types of changes to the rent ceiling affect landlords and tenants. A policy that makes vouchers more generous across a metro area benefits landlords through increased rents, with minimal impact on neighborhood and unit quality. A second policy that indexes rent ceilings to neighborhood rents leads voucher holders to move in higher-quality neighborhoods with lower crime, poverty and unemployment.
Tax Enforcement and Tax Policy: Evidence on Taxpayer Responses to EITC Correspondence Audits
John Guyton et al.
NBER Working Paper, March 2018
Each year, the United States Internal Revenue Service (IRS) sends notices to selected taxpayers who claim Earned Income Tax credit (EITC) benefits to request additional documentation to verify those claims. This paper uses administrative tax data to examine the impacts of these correspondence audits on taxpayer behavior. The quasi-experimental research design compares randomly-selected audited taxpayers to taxpayers with similar risk scores who were not selected for a correspondence audit. The results indicate that, in the years following an audit, there are decreases in the likelihoods of claiming EITC benefits and filing returns. Taxpayers with self-employment income at the time of audit appear likely to increase wage employment following a correspondence audit, while taxpayers with wage income at the time of audit appear likely to decrease labor force participation following disallowance of EITC benefits. The results for wage earners indicate labor force participation elasticities of roughly 0.03.
Intersectional motherhood: Investigating public support for child care subsidies
Erin Cassese & Tiffany Barnes
Politics, Groups, and Identities, forthcoming
Past research shows that beneficiary characteristics shape public support for social welfare programs. Intergroup attitudes and stereotypes can determine whether a group is seen as deserving of aid or exploiting the system for personal gain. One’s own social group membership can also influence program support. Women, for example, tend to favor social welfare programs more than men, all else equal. In this paper, we investigate how race, gender, and class intersect to shape support for child care subsidies for working mothers among White Americans. Using a survey experiment that varies the characteristics of program beneficiaries, we consider (1) whether support for child care subsidies varies depending on the race and class of mothers receiving subsidies, and (2) whether women are generally more supportive of child care subsidies, in line with research on the gender gap in public opinion. The results indicate that racial cues affect White men and White women similarly, but that gender differences emerge in response to cues regarding recipient class.