General Welfare

Kevin Lewis

November 18, 2010

The State of the Safety Net in the Post-Welfare Reform Era

Marianne Bitler & Hilary Hoynes
NBER Working Paper, October 2010

The passage of the 1996 welfare reform bill led to sweeping changes to the central U.S. cash safety net program for families with children. Importantly, along with other changes, the reform imposed lifetime time limits for receipt of welfare de facto ending the entitlement nature of cash welfare for poor families with children in the United States. Despite dire predictions about poverty and deprivation, the previous research shows that caseloads declined and employment increased, with no detectible increase in poverty or worsening of child-well-being. We re-evaluate these results in light of the severe recession which began in December 2007. In particular, we examine how the cyclicality of the response of program caseloads and family well-being has been altered by the implementation of welfare reform. We find that use of food stamps and non-cash safety net program participation have become significantly more responsive across economic cycles after welfare reform, going up more after reform when unemployment increases. By contrast, there is no evidence that cash welfare for families with children is more responsive after reform, and some evidence that it might be less so. There is some evidence that poverty increases more with the unemployment rate after reform (and no evidence that poverty increases less with unemployment after reform). We find that reform has led to no significant effects on the cyclical responsiveness of food consumption, food insecurity, health insurance, household crowding, or health.


Public transfers to the poor: Is Europe really much more generous than the United States?

Dolores Collado & Iñigo Iturbe-Ormaetxe
International Tax and Public Finance, December 2010, Pages 662-685

Fighting poverty is an important concern in most societies. This usually involves transferring resources to the poor. There exists a widespread view that European countries are much more generous to the poor than the United States. We study whether this is really the case. First, we argue that using data on aggregate spending does not allow us to conclude who the final recipients of social expenditure are. We then analyze microeconomic evidence from the Current Population Survey and the European Community Household Panel and find mixed results. In particular, when the concept of relative poverty is used, we find that every individual below the poverty line receives an average transfer in the United States that is 45% higher than in the European Union. When the old are excluded from the sample, this difference is reduced to 14%.


The Impact of the Earned Income Tax Credit on Economic Well-Being: A Comparison Across Household Types

Nicole Simpson, Jill Tiefenthaler & Jameson Hyde
Population Research and Policy Review, December 2010, Pages 843-864

Using survey data from Earned Income Tax Credit (EITC) recipients in Madison County, New York, we evaluate the effectiveness of the EITC in improving the economic well-being of low-income households. In particular, we examine the impact of the EITC across household types. For tax years 2002 through 2004, we find that the EITC is responsible for significantly lowering the poverty rate of EITC recipients, from 57 to 49%. In fact, for households below the poverty line, the EITC fills 31% of the gap between their adjusted gross income and the poverty line. The EITC has the largest impact on single parent households, lowering their poverty rate by 11.2 percentage points and reducing their poverty gap by almost 35%. However, the EITC has negligible effects on the poorest households in the sample-childless singles. A majority (64%) of EITC recipients intends to use at least some of the refund on basic needs and almost half plan on using part of their refund for debt repayment. This suggests that the EITC helps the majority of recipients get by but does not increase their economic mobility. Somewhat surprisingly, single parent households in the sample are not that different from married parent households in terms of EITC amounts, poverty rates, use of credit, and participation in government programs, despite earning less.


Is there an extended family of Mediterranean welfare states?

John Gal
Journal of European Social Policy, October 2010, Pages 283-300

The goal of this article is to suggest that an extended family of Mediterranean welfare states exists and that it consists of eight different nations, some of which have been ignored in the ongoing discourse on Mediterranean welfare states. More specifically, it is claimed that the extended family of Mediterranean welfare states includes Cyprus, Greece, Israel, Italy, Malta, Spain, Portugal and Turkey. The article underscores a number of features common to members of this extended family of welfare states. Finally, three overarching themes that, in the past and present, appear to underlie the commonalities of Mediterranean welfare states and that can offer potential fruitful avenues for further study will be identified and discussed. These are religion, family and the role of clientelist-particularist relations in the structuring and functioning of welfare state institutions.


Non-income effects of welfare receipt on early childhood cognitive scores

Colleen Heflin & Sharon Kukla Acevedo
Children and Youth Services Review, forthcoming

Child poverty in America has become an enduring part of the social landscape that many families must navigate. As prior research has established that income transfers can affect child outcomes, we focus our attention on the conditions under which these transfers occur. Using panel data from the Fragile Families and Child Well-being Study, we examine the non-income effects of TANF participation on children's early cognitive development using methods to address statistical concerns about endogeneity and selection. Our results indicate that participating in TANF is negatively associated with cognitive development. Furthermore, we are able to identify maternal stress as a viable causal pathway between TANF receipt and cognitive development, a result that we are unable to replicate with a falsification test involving the Earned Income Tax Credit (EITC). Our results suggest that the structure of cash transfers may have effects on early childhood outcomes.


Estimating the Costs of Bad Outcomes for At-Risk Youth and the Benefits of Early Childhood Interventions to Reduce Them

Mark Cohen, Alex Piquero & Wesley Jennings
Criminal Justice Policy Review, December 2010, Pages 391-434

Although it appears that there is growing interest in early childhood intervention as an effort to reduce crime, resources continue to be funneled toward punishment and incarceration. Considering this and acknowledging earlier cost-based empirical research, the question still remains as to the cost incurred by a lifetime of involvement in crime and experiencing a host of adverse noncrime outcomes. This study provides a review of the literature in search of well-designed early childhood interventions that address a series of socials ills, such as crime and delinquency, educational attainment, drug and alcohol abuse, smoking, child abuse and neglect, poor health outcomes, and teen pregnancy. Furthermore, building on the earlier framework and basic methodology developed by Cohen and recently updated by Cohen and Piquero, this study offers calculations of the present value of lifetime costs imposed on society for each of these various social ills-discounted to the date of birth to put them on comparable terms. The largest cost is imposed by the career criminal (US$2.1-US$3.7 million). Next, the present value costs associated with both drug abuse and alcohol dependence/abuse are roughly the same - about US$700,000 each - whereas child abuse and neglect costs an estimated US$250,000 to US$285,000. Health-related outcomes range from a low US$10,300 for the estimated present value cost of low birth weight to US$127,000, US$144,000, US$187,000, and US$260,000 for coronary heart disease, asthma, diabetes, and smoking, respectively. Finally, the present value cost of teen pregnancy is estimated to range from US$120,000 to US$140,000. Thus, properly designed programs and policies that focus on early childhood intervention have the potential to produce significant social benefits. Study limitations and suggestions for future research are also discussed.


The Poor Law of Old England: Institutional Innovation and Demographic Regimes

Morgan Kelly & Cormac Ó Gráda
Journal of Interdisciplinary History, Winter 2011, Pages 339-366

The striking improvement in life expectancy that took place in England between the Middle Ages and the seventeenth century cannot be explained either by an increase in real wages or by better climatic conditions. The decrease in the risk of utter destitution or of death from famine that was evident on the eve of the Industrial Revolution stemmed, in part, from institutional changes in the old poor law, which began to take shape and become effective early in the seventeenth century.


Wage traps as a cause of illiteracy, child labor, and extreme poverty

Dennis Gärtner & Manfred Gärtner
Research in Economics, forthcoming

When labor incomes approach subsistence levels, the labor supply curve slopes outward, because the fight for survival mandates households to look for longer work hours in response to falling wage rates. We explore conditions under which near-subsistence scenarios may imply wage traps, labor market failures that can be the cause of undernourishment, illiteracy, and child labor. After stating general conditions under which wage traps occur, we look at specific production functions typically employed in quantitative analyses of growth and development. We find that standard Cobb-Douglas production functions do not permit wage traps, whereas CES functions do. Beyond that it turns out that when subsistence requirements increase with work hours, and when work effort rises with the wage rate, up to the efficiency-wage threshold, wage traps become more likely. Measures such as bans on child labor, implementation of minimum wage laws, or the establishment of labor unions may quite effectively improve conditions in wage-trapped labor markets.


Public support for redistribution: What explains cross-national differences?

Ursula Dallinger
Journal of European Social Policy, October 2010, Pages 333-349

Rising levels of income inequality in almost all industrialized countries as a consequence of globalization and de-industrialization might lead one to assume that voters will demand more redistribution and exert influence on their governments to set up redistributive programmes. However, this is not always the case. Citizens do not react directly to actual levels of inequality, as research on the attitudes towards inequality and redistribution has shown. In this article the complex relation between cross-national variation of inequality and public support for redistribution is analysed. The article draws on explanations from both a political economy perspective as well as drawing on comparative welfare regime research. While the former conceives cross-national variations in support for redistribution as the aggregate effect of a demand of rational actors reacting to country context, the latter focuses on the impact of institutions and culture superimposing itself over self-interest. The empirical analysis tests the explanations of both the political economy and welfare regimes approach. Since the article focuses on the impact of context variables on individual attitudes, a multilevel analysis is adopted. Data are taken from the 1999 ‘International Social Survey Program' and are complemented by macro-economic variables. Based on the results, a model of contingent support for redistribution is put forward, where culturally influenced definitions are embedded in economic processes.


Age-based self-interest, intergenerational solidarity and the welfare state: A comparative analysis of older people's attitudes towards public childcare in 12 OECD countries

Achim Goerres & Markus Tepe
European Journal of Political Research, October 2010, Pages 818-851

When faced with the necessity of reforming welfare states in ageing societies, politicians tend to demand more solidarity between generations because they assume that reforms require sacrifices from older people. Political economy models, however, do not investigate such a mechanism of intergenerational solidarity, suggesting that only age-based self-interest motivates welfare preferences. Against this backdrop, this article asks: Does the experience of intergenerational solidarity within the family matter for older people's attitudes towards public childcare - a policy area of no personal interest to them? The statistical analysis of a sample with individuals aged 55+ from twelve OECD countries indicates that: intergenerational solidarity matters; its effect on policy preferences is context-dependent; and influential contexts must - according to the evidence from twelve countries - be sought in all societal spheres, including the political (family spending by the state), the economic (female labour market integration) and the cultural (public opinion towards working mothers). Overall, the findings imply that policy makers need to deal with a far more complex picture of preference formation toward the welfare state than popular stereotypes of ‘greedy geezers' suggest.


Market-led Growth and Well-being - Gujarat, 1980-2005

Anita Dixit
Journal of Developing Societies, December 2010, Pages 387-413

An influential school in economic theory maintains that economic growth trickles down and automatically results in the distribution of its benefits across the population. This article examines this hypothesis in the context of Gujarat, one of the fastest growing states of India. Growth is based on industry and exports, mainly unhampered by labor unrest. However, the state has not made significant achievements in terms of well-being, especially in the rural areas. The article analyses levels of nutrition and rural poverty in the state, and finds a slowdown in these parameters. We contend that the neoliberal agenda of uncontrolled, outward-looking growth does not result in reduction of poverty or malnourishment. The policy implications are a need to promote the agricultural sector with a focus on resource-poor farmers and the re-institutionalization of an efficient system of food grain subsidization, which has been reduced in recent years.

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