Can Low-wage Workers Find Better Jobs?
Jaison Abel, Richard Florida & Todd Gabe
Federal Reserve Working Paper, April 2018
There is growing concern over rising economic inequality, the decline of the middle class, and a polarization of the U.S. workforce. This study examines the extent to which low-wage workers in the United States transition to better jobs, and explores the factors associated with such a move up the job ladder. Using data covering the expansion following the Great Recession (2011-17) and focusing on short-term labor market transitions, we find that around 70 percent of low-wage workers stayed in the same job, 11 percent exited the labor force, 7 percent became unemployed, and 6 percent switched to a different low-wage job. Troublingly, just slightly more than 5 percent of low-wage workers found a better job within a 12-month period. Study results point to the importance of educational attainment in helping low-wage workers move up the job ladder.
Does Prenatal WIC Participation Improve Child Outcomes?
Anna Chorniy, Janet Currie & Lyudmyla Sonchak
NBER Working Paper, June 2018
Large literatures document positive effects of WIC on birth outcomes, and separately connect health at birth and future outcomes. But little research investigates the link between prenatal WIC participation and childhood outcomes. We explore this question using a unique data set from South Carolina which links administrative birth, Medicaid, and education records. We find that relative to their siblings, prenatal WIC participants have a lower incidence of ADHD and other common childhood mental health conditions and of grade repetition. These findings demonstrate that a “WIC start” results in persistent improvements in child outcomes across a range of domains.
The Poverty Reduction of Social Security and Means-Tested Transfers
Bruce Meyer & Derek Wu
NBER Working Paper, May 2018
Many studies examine the anti-poverty effects of social insurance and means-tested transfers, relying solely on survey data with substantial errors. We improve on past work by linking administrative data from Social Security and five large means-tested transfers (SSI, SNAP, Public Assistance, the EITC, and housing assistance) to 2008-2013 Survey of Income and Program Participation data. Using the linked data, we find that Social Security cuts the poverty rate by a third - more than twice the combined effect of the five means-tested transfers. Among means-tested transfers, the EITC and SNAP are most effective. All programs except for the EITC sharply reduce deep poverty (below 50% of the poverty line), while the impact of the EITC is more pronounced at 150% of the poverty line. For the elderly, Social Security single-handedly slashes poverty by 75%, more than 20 times the combined effect of the means-tested transfers. While single parent families benefit more from the EITC, SNAP, and housing assistance, they are still relatively underserved by the safety net, with the six programs together reducing their poverty rate by only 38%. SSI, Public Assistance, and housing assistance have the highest share of benefits going to the pre-transfer poor, while the EITC has the lowest. Finally, the survey data alone provide fairly accurate estimates for the overall population at the poverty line, although they understate the effects of Social Security, SNAP, and Public Assistance. However, there are more striking differences at other income cutoffs and for specific family types. For example, the survey data yield 1) effects of SNAP and Public Assistance on near poverty that are two-thirds and one-half what the administrative data generate and 2) poverty reduction effects of SSI, Social Security, and Public Assistance that are 34-44% of what the administrative data produce for single parent families.
Safety Net Investments in Children
Hilary Hoynes & Diane Whitmore Schanzenbach
NBER Working Paper, May 2018
In this paper, we examine what groups of children are served by core childhood social-safety net programs - including Medicaid, EITC, CTC, SNAP, and AFDC/TANF - and how that’s changed over time. We find that virtually all gains in spending on the social safety net for children since 1990 have gone to families with earnings, and to families with income above the poverty line. This is the result of welfare reform and the expansion of in work tax credits. We review the available research and find that access to safety net programs during childhood leads to benefits for children and society over the long run. This evidence suggests that the changes to the social safety net may have lasting negative impacts on the poorest children.
TANF leavers and economic self-sufficiency: Results from a study in Georgia
Fred Brooks et al.
Journal of Poverty, forthcoming
Since 1996 the U.S. government has stated the primary purpose of Temporary Assistance for Needy Families (TANF) is to help needy families achieve self-sufficiency. Twenty years after welfare reform this cross-sectional, survey study tests this proposition with a sample of 60 former TANF recipients in Georgia. Applying three different operational definitions of economic self-sufficiency (ESS), between 4% and 17% of respondents were self-sufficient. Implications include advancing the methodology, operationalization, and debate around ESS in addition to questioning the fundamental premise of welfare reform: that simply working in the current economy lifts most TANF leavers from poverty to ESS.
Social Protection and Economic Development: Are the Poorest Being Lifted-Up or Left-Behind?
Martin Ravallion, Dean Jolliffe & Juan Margitic
NBER Working Paper, May 2018
Standard measures of poverty may reveal nothing about whether the poorest of the poor are being lifted-up or left-behind, yet this is a widespread concern among policy makers and citizens. The paper assesses whether public spending on social protection benefits the poorest and hence lifts the floor, and what role economic development plays. Evidence is presented for the developing world and the US. Across developing countries, a higher mean income comes with a higher floor. The bulk of this income effect is direct rather than via higher spending on social protection. That spending generally lifts the floor though this is mainly due to social insurance; on average, social assistance adds only 1.5 cents per day to the floor. Turning to the US, the paper finds that the floor has been sinking over the last 30 years, associated with an inequitable growth process. Food stamp spending partially compensates the poorest, and helped stabilize the floor in the wake of the 2008 financial crisis. The poorest in the US gain more from food stamps than average spending on food stamps, though the program’s impact on the floor per $ spent has fallen over time.
Can Information Change Personal Retirement Savings? Evidence from Social Security Benefits Statement Mailings
Susan Payne Carter & William Skimmyhorn
American Economic Review, May 2018, Pages 93-97
Despite concern about the viability of public retirement programs and potential undersaving for retirement, we still know little about the impact of government provided information on individual behavior. We exploit plausibly exogenous variation in exposure to the world's largest personalized retirement benefits statement from the US Social Security Administration to evaluate the effects of information and encouragement on individual retirement savings decisions. Using three natural experiments between 2011 and 2014 and administrative data, we find no impact of the statements on individual retirement savings in their employer provided retirement accounts.
Minimum Cash Wages, Tipped Restaurant Workers, and Poverty
Joseph Sabia, Richard Burkhauser & Taylor Mackay
Industrial Relations, forthcoming
This is the first study to examine the effect of increases in the tipped minimum cash wage - the wage employers must pay to tipped employees - on poverty. Using March Current Population Survey data (1988-2014), we find that tipped minimum cash wage increases are associated with declines in the risk of a tipped restaurant worker living in a poor family (elasticities around -0.2). However, we find little evidence of poverty‐alleviating effects when using the household rather than the family as the sharing unit. This result is consistent with evidence that a substantial share of tipped workers who live in a poor family live in a nonpoor household with persons unrelated by blood, marriage, or adoption who contribute to the household's income. Furthermore, we find that tipped minimum cash wage hikes are associated with increases in the risk of a younger, less‐educated individual living in a poor family or household. Adverse labor demand effects that redistribute income among low‐skilled individuals drive these results. We conclude that raising the tipped minimum cash wage is a poorly targeted policy to deliver income to poor restaurant workers.
Experimental scarcity increases the relative reinforcing value of food in food insecure adults
Amanda Crandall & Jennifer Temple
Appetite, September 2018, Pages 106-115
People with fewer financial resources are at greater risk for obesity, but the mechanisms of this relationship are not fully understood. One factor that is related, both cross-sectionally and prospectively, to obesity is the relative reinforcing value of food. It is possible that the experience of scarcity increases this reinforcing value. To date, no studies have examined this potential relationship experimentally in humans. The purpose of the studies presented here was to test the hypothesis that experimental manipulations of perceived scarcity would impact the relative reinforcing value of food. A secondary hypothesis was that individuals who report experiencing food insecurity would be more sensitive to these experimental manipulations. In order to test these hypotheses, we investigated the effects of experimentally manipulated scarcity on the relative reinforcing value of food in a laboratory setting. Study 1 had a within-subjects design and included 25 adult males and females. Scarcity was manipulated by placing time and resources limits on the relative reinforcing value task and examining responding for a high calorie snack food versus that of an alternative reinforcer. Study 1 showed a tendency for food insecure participants to respond more for all reinforcers across conditions and a higher proportional response for food when resources were limited. Study 2 also made use of a within-subjects design with 30 males and females and primed scarcity by creating financial gains and losses on the Iowa Gambling Task. We observed increased relative reinforcing values of food among food insecure participants in the control and financial loss conditions. When taken together, these two studies suggest that individuals who report experiencing food insecurity respond to acute manipulations of scarcity by increasing their reinforcing value of snack food.
“Be My Guest”: The Link Between Concentrated Poverty, Race, and Family-Level Support
Journal of Family Issues, forthcoming
Exposure to concentrated poverty is largely understood as reflecting the role of individual influences and racial disparities, with less information on the role of extended family. Coresiding with family members represents one classic mechanism reducing exposure to economic hardship, but we often combine those residing as “guests” with those who are “hosting” their extended family. Using data from the Fragile Families and Child Wellbeing Study (N = 4,054), I explore the impact of living with family on the likelihood of residing in concentrated poverty. I find that mothers who coreside as “guests” with family, but not those who are hosting their relatives, have significantly lower odds of living in impoverished neighborhoods compared with those who do not reside with relatives, once controlling for socioeconomic and demographic characteristics. This research reveals that family networks do play a role in structuring neighborhood attainment, with strong implications for better understanding vulnerability to neighborhood poverty.
What Is the Impact of Food Stamps on Prices and Products Variety? The Importance of the Supply Response
American Economic Review, May 2018, Pages 557-561
Comparing US states that implemented policies generating state-specific variation in the take-up rate for food stamps, I find that food stamp eligible households experienced lower inflation and a faster increase in product variety in states with a larger increase in take-up (i.e., with increasing demand from the eligible population). Consistent with a causal interpretation, the effects are driven by food products with strong local brands and there is no comparable pattern for ineligible households across the income distribution. Thus, the long-run supply response to changes in demand from food stamp recipients has a first-order impact on the program's cost-benefit analysis.
Changes in Nutrient Intake at Retirement
Melvin Stephens & Desmond Toohey
NBER Working Paper, May 2018
While the literature finding a decrease in food expenditures at retirement suggests households do not adequately save for retirement, subsequent evidence that nutrient intake is unaffected by retirement has tempered these concerns. We further examine nutrient intake changes at retirement both by analyzing a much wider range of datasets, including longitudinal data, and by improving upon the empirical methodology used in earlier work. Our analysis yields four main results. First, unlike prior work, we find that caloric and nutrient intake fall at retirement in numerous cross-sectional datasets. We can reconcile these contrasting results as being due to well-documented differences and improvements in methodologies used to measure food intake. Second, using longitudinal data, we also find that intake falls at retirement. Third, we show that a food consumption index used in prior work to capture the relationship between permanent income and foods eaten can severely underestimate the impact of retirement on consumption. We show that a minor methodological revision circumvents this bias and that the revised consumption index falls at retirement. Finally, while unemployment reduces the consumption index, we find, in contrast to prior work, that the impact of retirement on the consumption index is larger. Overall, we consistently find that retirement reduces food intake.
Take-up and Targeting: Experimental Evidence from SNAP
Amy Finkelstein & Matthew Notowidigdo
NBER Working Paper, May 2018
This paper develops a framework for evaluating the welfare impact of various interventions designed to increase take-up of social safety net programs in the presence of potential behavioral biases. We calibrate the key parameters using a randomized field experiment in which 30,000 elderly individuals not enrolled in - but likely eligible for - the Supplemental Nutrition Assistance Program (SNAP) are either provided with information that they are likely eligible, provided with this information and also offered assistance in applying, or are in a “status quo” control group. Only 6 percent of the control group enrolls in SNAP over the next 9 months, compared to 11 percent of the Information Only group and 18 percent of the Information Plus Assistance group. The individuals who apply or enroll in response to either intervention receive lower benefits and are less sick than the average enrollee in the control group. The results are consistent with the existence of optimization frictions that are greater for needier individuals, suggesting that the poor targeting properties of the interventions reduce their welfare gains.