Have nots

Kevin Lewis

August 23, 2017

Long-Term Trends in Rural and Urban Poverty: New Insights Using a Historical Supplemental Poverty Measure
Laura Nolan, Jane Waldfogel & Christopher Wimer
ANNALS of the American Academy of Political and Social Science, July 2017, Pages 123-142

Poverty has a strong relationship to geography in the United States. Previous research has found that rural areas have higher average poverty rates than urban areas, but the new supplemental poverty measure (SPM) has shown in recent years that urban areas have higher average poverty. In this article, we analyze poverty trends from 1967 to 2014 in rural and urban America, using the improved SPM metrics. We find a dramatic decline in poverty in rural areas, and also show that the geographic adjustment of the poverty threshold in the SPM (which lowers poverty thresholds in less expensive areas and raises them in more expensive areas) is an important explanatory factor. We also find that changes in the demographic and economic characteristics of rural and urban residents help to explain the decline. Last, we investigate whether migration of the poor between rural and urban areas helps to account for differential poverty trends, but we find little evidence in support of that hypothesis.

The Impact of Federal Homelessness Funding on Homelessness
David Lucas
Southern Economic Journal, forthcoming

Federal spending on homelessness has increased significantly in recent years. I estimate the relationship between federal homelessness funding and homeless counts in 2011, 2013, and 2015 cross sections. I instrument for funding using a community's pre-1940 housing share, a key variable in an originally unrelated funding formula borrowed for homelessness grants. Funding increases sheltered homelessness; meanwhile, funding is unrelated to unsheltered homelessness. Lower bound estimates suggest that the minimum cost of reducing unsheltered homelessness has increased over time, from $16,400 in 2011 to $20,800 in 2013 to $50,000 in 2015. In 2013, an additional $1 thousand dollars corresponds to a .309 higher homeless rate per 10,000 people. The effect is larger for families than individuals. Funding is positively related to chronic homelessness and is unrelated to youth and child homelessness. My results suggest limitations on federal funding's ability to reduce homelessness among some of the most marginalized groups in society.

Do Older Americans Have More Income Than We Think?
Adam Bee & Joshua Mitchell
U.S. Census Bureau Working Paper, July 2017

The Current Population Survey Annual Social and Economic Supplement (CPS ASEC) is the source of the nation's official household income and poverty statistics. In 2012, the CPS ASEC showed that median household income was $33,800 for householders aged 65 and over and the poverty rate was 9.1 percent for persons aged 65 and over. When we instead use an extensive array of administrative income records linked to the same CPS ASEC sample, we find that median household income was $44,400 (30 percent higher) and the poverty rate was just 6.9 percent. We demonstrate that large differences between survey and administrative record estimates are present within most demographic subgroups and are not easily explained by survey design features or processes such as imputation. Further, we show that the discrepancy is mainly attributable to underreporting of retirement income from defined benefit pensions and retirement account withdrawals. Using archived survey and administrative record data, we extend our analysis back to 1990 and provide evidence of underreporting from an earlier period. We also document a growing divergence over time between the two measures of median income which is in turn driven by the growth in retirement income underreporting. Turning to synthetic cohort analysis, we show that in recent years, most households do not experience substantial declines in total incomes upon retirement or any increases in poverty rates. Our results have important implications for assessing the relative value of different sources of income available to older Americans, including income from the nation's largest retirement program, Social Security. We caution, however, that our findings apply to the population aged 65 and over in 2012 and cannot easily be extrapolated to future retirees.

It's a Cruel Summer: Household Responses to Reductions in Government Nutrition Assistance
Lorenzo Almada & Ian McCarthy
NBER Working Paper, July 2017

The appropriate size and scope of government nutrition assistance programs is a regular source of debate among policy-makers, and with calls to reduce government benefits, a clear understanding of household responses to any proposed benefit reduction is critical. Exploiting the design of U.S. nutrition assistance programs, we examine how low-income households reallocate their budgets following an exogenous reduction in nutrition assistance benefits. The magnitude of our results suggests that the budget for an average low-income household with children is severely inflexible and likely unable to absorb more than a $2 to $3 reduction in nutrition benefits per child per week.

Welfare Rules, Incentives, and Family Structure
Robert Moffitt, Brian Phelan & Anne Winkler
NBER Working Paper, July 2017

We provide a new examination of the incentive effects of welfare rules on family structure among low-income women by emphasizing that the eligibility and benefit rules in the AFDC and TANF programs are based more on the biological relationship between the children and any male in the household than on marriage or cohabitation per se. Using data from 1996 through 2008, we analyze the effects of 1990s welfare reforms on family structure categories that incorporate the biological status of the male. Like past work, we find that most policies did not affect family structure. However, we do find that several work-related reforms increased single parenthood and decreased marriage to biological fathers. These results are especially evident when multiple work-related policies were implemented together and when we examine the longer term impacts of the policies. We posit that these effects of work-related welfare policies on family structure stem from their effects on increased labor force participation and earnings of single mothers combined with factors special to biological fathers, including a decline in their employment and wages.

Genetic and Environmental Influences on Household Financial Distress
Yilan Xu et al.
Journal of Economic Behavior & Organization, forthcoming

Heterogeneity of household financial outcomes emerges from various individual and environmental factors, including personality, cognitive ability, and socioeconomic status (SES), among others. Using a genetically informative data set, we decompose the variation in financial management behavior into genetic, shared environmental and non-shared environmental factors. We find that about half of the variation in financial distress is genetically influenced, and personality and cognitive ability are associated with financial distress through genetic and within-family pathways. Moreover, the genetic influences of financial distress are highest at the extremes of SES, which in part can be explained by neuroticism and cognitive ability being more important predictors of financial distress at low and high levels of SES, respectively.

Sympathy for the Diligent and the Demand for Workfare
Andres Drenik & Ricardo Perez-Truglia
NBER Working Paper, August 2017

We study the role of fairness concerns in the demand for redistribution through workfare. In the first part of the paper, we present new evidence from a survey experiment. We show that individuals are more generous towards poor people whom they perceive to be diligent workers relative to poor people whom they perceive to be non-diligent, a social preference that we label "sympathy for the diligent." This preference is much stronger than preferences regarding other characteristics of the poor, such as race, nationality, and disability. More important, we show that subjects with higher sympathy for the diligent have a stronger preference for workfare programs. In the second part of the paper, we incorporate our empirical findings into a model of income redistribution. We consider the case of a benevolent government with fairness concerns that prioritizes the well-being of individuals who exert the most effort. We characterize the optimal conditions under which the government introduces work requirements. Even if wasteful, work requirements can be optimal, because they allow for a better distinction between individuals who exert great effort and individuals who do not. However, if the government lacks commitment power, the availability of screening through work requirements leads to a lower equilibrium effort and, possibly, a Pareto-dominated allocation.

Does Gentrification Increase Employment Opportunities in Low-Income Neighborhoods?
Rachel Meltzer & Pooya Ghorbani
Regional Science and Urban Economics, September 2017, Pages 52-73

Gentrification is a term often associated with displacement and other negative byproducts of affluent in-movers altering the economic and demographic composition of a neighborhood. Empirical research on neighborhood change, however, has not produced any conclusive evidence that incumbent residents are systematically displaced under circumstances of gentrification. This raises the question, do these incumbent residents benefit from the economic and social changes that accompany gentrification? In this paper, we focus on low-income neighborhoods undergoing economic transitions (i.e. gentrification) and test whether or not the potential benefits from these changes stay within the community, in the form of employment opportunities for local residents. We find that employment effects from gentrification are quite localized. Incumbent residents experience meaningful job losses within their home census tract, even while jobs overall increase. In our preferred model, local jobs decline by as much as 63 percent. These job losses are concentrated in service and goods-producing sectors and low- and moderate-wage positions. Proximate job losses, however, are compensated for by larger gains in goods-producing and low-wage jobs slightly farther away. There is some evidence that chain establishments are associated with modest job gains in gentrifying census tracts, and that, outside of NYC, businesses that stay in place around gentrifying neighborhoods are associated with marginal job gains.

Considering the role of food insecurity in low self-control and early delinquency
Dylan Jackson et al.
Journal of Criminal Justice, forthcoming

Methods: In order to examine these associations, we employ data from the Fragile Families and Child Wellbeing Study (FFCWS) - a national study that follows a large group of children born in the U.S. between 1998 and 2000.

Results: Children raised in food insecure households exhibit significantly lower levels of self-control during early childhood and higher levels of delinquency during late childhood than children raised in food secure households, net of covariates. Both transient and persistent food insecurity are significantly and positively associated with low self-control and early delinquency, although persistent food insecurity is associated with larger increases in the risk of low self-control and early delinquency. Ancillary analyses reveal that low self-control partly explains the association between food insecurity and early delinquency.

The Effect of Disability Insurance Payments on Beneficiaries' Earnings
Alexander Gelber, Timothy Moore & Alexander Strand
American Economic Journal: Economic Policy, August 2017, Pages 229-261

A crucial issue is whether social insurance affects work decisions through income or substitution effects. We examine this in the context of US Social Security Disability Insurance (DI), exploiting discontinuous changes in the benefit formula with a regression kink design to estimate the income effect of payments on earnings and employment. Using administrative data on all new DI beneficiaries from 2001 to 2007, our preferred estimate is that an increase in DI payments of $1 causes an average decrease in beneficiaries' earnings of $0.20 and that annual employment rates decrease by 1.3 percentage points per $1,000 of DI payments. These findings suggest that the income effect accounts for a majority of DI-induced reductions in earnings.

Public Transit Access and the Changing Spatial Distribution of Poverty
Rahul Pathak, Christopher Wyczalkowski & Xi Huang
Regional Science and Urban Economics, September 2017, Pages 198-212

This article examines whether access to public transportation plays a significant role in determining the spatial distribution of poverty in a metropolitan area. Our empirical strategy relies on long-term changes in poverty and access to bus transit at the neighborhood level in the Atlanta metropolitan area. We estimate the effect of bus transit access on poverty using fixed-effects models to control for time-invariant unobservable characteristics. Furthermore, we undertake several robustness checks using a combination of instrumental variable regression, subsample analysis, and propensity score matching. Our results indicate that, on average, after controlling for neighborhood characteristics, census tracts with better access to public bus transportation have a higher proportion of low-income households - in both the central city and the suburbs. Thus, policies that improve access to transit in underserved areas can plausibly expand residential opportunities for the poor and reduce spatial inequities in urban centers.

When Does it Count? The Timing of Food Stamp Receipt and Educational Performance
Chad Cotti, John Gordanier & Orgul Ozturk
University of South Carolina Working Paper, June 2017

The impact of poor nutrition has been established as an important determinant of learning and achievement among school aged children. It has also been demonstrated that the single monthly treatment of food stamps leaves meaningful nutritional deficiencies in recipient households during the final weeks of the benefits cycle. This paper exploits detailed administrative data on standardized math tests scores and randomized food stamp receipt dates to allow us to measure the impact of these low nutritional periods on student performance. Our main results are that scores are notably lower when the exam falls near the end of the benefit cycle and when food stamps arrive on the four days immediately preceding the exam. While both boys and girls experienced a similar penalty with receipt near the end of the cycle, the effect from receipt just prior to the exam appears to be partially explained by a large negative effect associated with weekend receipt, which coincides with the four days prior to the exam, that is concentrated among African-American boys. Our results provide evidence that households do not sufficiently smooth consumption and that this has measurable effects on student performance. The fact that weekend receipt differs suggests a behavioral response from households beyond food insecurity that also has meaningful effects.

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