Not Much Money
Do Homelessness Prevention Programs Prevent Homelessness? Evidence from a Randomized Controlled Trial
David Phillips & James Sullivan
Review of Economics and Statistics, forthcoming
Abstract:
This paper provides the first evidence from a randomized controlled trial isolating the impact of financial assistance to prevent homelessness. In this study individuals and families at imminent risk of homelessness were offered temporary financial assistance, averaging nearly $2,000 for those assigned to treatment. Our results show that this assistance significantly reduces homelessness by 3.8 percentage points from a base rate of 4.1 percent. The effects are larger for people with a history of homelessness and no children. Despite concerns about cost-effectiveness due to difficulty targeting, our estimates suggest that the benefits to homelessness prevention exceed costs.
The Effect of Relaxing Local Housing Market Regulations on Federal Rental Assistance Programs
Kevin Corinth & Amelia Irvine
Journal of Urban Economics, forthcoming
Abstract:
The majority of U.S. households that qualify for federal rental housing assistance do not receive it. In the absence of an entitlement to housing assistance, an underexplored cause of the shortfall is that higher rents in some areas driven by supply-constraining local regulations increase program costs, leaving fewer funds available to serve additional families. In this paper, we simulate the effect of increasing housing supply on the cost of Section 8 housing assistance programs in Los Angeles, as well as all 11 metropolitan areas most constrained by local regulations. If Los Angeles (all 11 metropolitan areas) produced new housing units at the same rate as the 90th percentile metropolitan area for a decade, market rents would fall by 18.1 percent (2.0 to 24.0 percent), and federal cost savings would equal $353 million ($1.8 billion), enough to increase the number of assisted families by 23.8 percent (18.6 percent). For comparison, doubling the number of units placed in service through the Low Income Housing Tax Credit for a decade -- an alternative method for increasing housing supply -- would lead to much lower cost savings of $18 million in Los Angeles, and $231 million across all 11 metropolitan areas.
A Rising Tide Lifts All Homes? Housing Quality Improvements for Safety Net Recipients Since the 1980s
Erik Hembre, Michael Collins & Samuel Wylde
University of Illinois Working Paper, April 2023
Abstract:
This study analyzes patterns of housing consumption and expenditures among social safety net recipients since 1985. For safety net recipients, including Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP) and cash welfare (AFDC/TANF), monthly housing expenditures have risen from $692 to $1,341. However, these increased expenditures partially reflect housing quantity improvements, including more square footage, more rooms, and larger lot sizes. The data also show a marked improvement in housing quality, such as fewer sagging roofs, broken appliances, rodents, and peeling paint. The housing quality for social safety net recipients improved across 35 indicators. These quality improvements equate to a 35 to 44 percent increase in housing consumption and suggest that a typical safety net recipient in 2021 experiences housing consumption equivalent to the average national household in 1985. Though relative housing consumption has remained similar for safety net recipients, this "rising tide" of housing quality may have additional benefits for the health and well being of families and children living in better housing.
Minimum Wages and Homelessness
Seth Hill
University of California Working Paper, June 2023
Abstract:
America's cities continue to struggle with homelessness. Here I offer a factor, the minimum wage, that adds to existing individual and structural explanations. If there are negative distributional consequences of minimum wages, they most likely harm the lowest-skill workers many of whom already face housing insecurity. To evaluate this argument, I study minimum wage changes in American cities and states 2006 to 2019. Using difference-in-differences methods for staggered treatments I find that minimum wage increases lead to increased point-in-time homeless population counts. Further analysis suggests disemployment and rental housing prices, but not migration, as mechanisms. Scholars and policymakers who aim to understand and combat homelessness should consider labor market opportunities. Distributional consequences of minimum wage laws also merit further inquiry.
The Effect of Means-Tested Transfers on Work: Evidence from Quasi-Randomly Assigned SNAP Caseworkers
Jason Cook & Chloe East
NBER Working Paper, June 2023
Abstract:
We are the first to document that Supplemental Nutrition Assistance Program (SNAP) caseworker behavior impacts program receipt, likely due to differing levels of helpfulness in navigating the complicated application process. We use the conditional random assignment of caseworkers as an instrument for SNAP receipt to assess the impact of SNAP on work decisions. Two-thirds of SNAP applicants do not work before applying and experience no change in work if granted SNAP. Those working beforehand decrease work temporarily. The canonical, static labor supply model cannot fully explain these results, but taking account of other reasons individuals do not work can.
Income and Terrorism: Insights From Subnational Data
Michael Jetter, Rafat Mahmood & David Stadelmann
Journal of Conflict Resolution, forthcoming
Abstract:
This paper first introduces a theoretical formalization connecting a polity's income level to terrorism. Our framework can accommodate different underlying assumptions about individual- and society-level grievances, yielding competing hypotheses. We then construct a panel database to study terrorism for 1527 subnational regions in 75 countries between 1970 and 2014. Results consistently imply an inverted U-shape that remains robust to incorporating a comprehensive set of region-level covariates, region- and time-fixed effects, as well as estimating an array of alternative specifications. The threat of terrorism systematically rises as low-income polities become richer, peaking at GDP/capita levels of ? US$12,800 (in constant 2005 PPP US$), but then falls consistently above that level. This pattern emerges for domestic and transnational terrorism alike. While peaks differ by perpetrator ideology, the inverted U shape also prevails across ideology-specific subsamples. In sum, alleviating poverty may first exacerbate terrorism, contrary to much of the proposed recipes advocated since 9/11.
The Economics of Financial Stress
Dmitriy Sergeyev, Chen Lian & Yuriy Gorodnichenko
NBER Working Paper, May 2023
Abstract:
We study the psychological costs of financial constraints and their economic consequences. Using a representative survey of U.S. households, we document the prevalence of financial stress in U.S. households and a strong relationship between financial stress and measures of financial constraints. We incorporate financial stress into an otherwise standard dynamic model of consumption and labor supply. We emphasize two key results. First, a psychology-based theory of poverty traps requires two equally important components: financial stress itself and naivete about financial stress. Specifically, sophisticates save enough to escape high-stress states, because they understand that doing so alleviates the economic consequences of financial stress. On the other hand, naifs dis-save, fall into a poverty trap, and incur high welfare losses. Second, the financial stress channel can reverse the counterfactual negative wealth effect on labor supply because relieving stress frees up cognitive resources for productive work. Financial stress also has macroeconomic implications on wealth inequality and fiscal multipliers.
Free and reduced-price meal enrollment does not measure student poverty: Evidence and policy significance
Ishtiaque Fazlul, Cory Koedel & Eric Parsons
Economics of Education Review, June 2023
Abstract:
Free and reduced-price meal (FRM) enrollment is commonly used in education research and policy applications as an indicator of student poverty. However, using multiple data sources external to the school system, we show that FRM status is a poor proxy for poverty, with enrollment rates far exceeding what would be expected based on stated income thresholds for program participation. This is true even without accounting for community eligibility for free meals, although community eligibility has exacerbated the problem in recent years. Over the course of showing the limitations of using FRM data to measure poverty, we also provide early evidence on the potential value of two alterative measures of school poverty.