State of poverty

Kevin Lewis

July 30, 2014

A family-oriented psychosocial intervention reduces inflammation in low-SES African American youth

Gregory Miller et al.
Proceedings of the National Academy of Sciences, forthcoming

Children of low socioeconomic status (SES) are at elevated risk for health problems across the lifespan. Observational studies suggest that nurturant parenting might offset some of these health risks, but their design precludes inferences about causal direction and clinical utility. Here we ask whether a psychosocial intervention, focused improving parenting, strengthening family relationships, and building youth competencies, can reduce inflammation in low-SES, African Americans from the rural South. The trial involved 272 mothers and their 11-y-old children from rural Georgia, half of whose annual household incomes were below the federal poverty line. Families were randomly assigned to a 7-wk psychosocial intervention or to a control condition. When youth reached age 19, peripheral blood was collected to quantify six cytokines that orchestrate inflammation, the dysregulation of which contributes to many of the health problems known to pattern by SES. Youth who participated in the intervention had significantly less inflammation on all six indicators relative to controls (all P values < 0.001; effect sizes in Cohen’s d units ranged from −0.69 to −0.91). Mediation analyses suggested that improved parenting was partially responsible for the intervention’s benefits. Inflammation was lowest among youth who received more nurturant-involved parenting, and less harsh-inconsistent parenting, as a consequence of the intervention. These findings have theoretical implications for research on resilience to adversity and the early origins of disease. If substantiated, they may also highlight a strategy for practitioners and policymakers to use in ameliorating social and racial health disparities.


Human Capital Effects of Anti-Poverty Programs: Evidence from a Randomized Housing Voucher Lottery

Brian Jacob, Max Kapustin & Jens Ludwig
NBER Working Paper, May 2014

Whether government transfer programs increase the human capital of low-income children is a question of first-order policy importance. Such policies might help poor children if their parents are credit constrained, and so under-invest in their human capital. But it is also possible that whatever causes parents to have low incomes might also directly influence children’s development, in which case transfer programs need not improve poor children’s long-term life chances. While several recent influential studies suggest anti-poverty programs have larger human capital effects per dollar spent than do even the best educational interventions, identification is a challenge because most transfer programs are entitlements. We overcome that problem by studying the effects on children of a generous transfer program that is heavily rationed — means-tested housing assistance. We take advantage of a randomized housing voucher lottery in Chicago in 1997, for which 82,607 people applied, and use administrative data on schooling, arrests, and health to track children’s outcomes over 14 years. We focus on families living in unsubsidized private housing at baseline, for whom voucher receipt generates large changes in both housing and non-housing consumption. Estimated effects are mostly statistically insignificant and always much smaller than those from recent studies of cash transfers, and are smaller on a per dollar basis than the best educational interventions.


European feelings of deprivation amidst the financial crisis: Effects of welfare state effort and informal social relations

Tim Reeskens & Wim van Oorschot
Acta Sociologica, August 2014, Pages 191-206

As European governments have embraced the credo of austerity, the perennial discussion whether welfare states erode the quality of social networks has taken on a more prominent position on political and social science research agendas. While non-believers of this so-called ‘crowding out’ thesis argue that social networks flourish well in welfare states, believers argue that welfare provisions render social networks irrelevant in mobilizing resources. Using the 2010 wave of the European Social Survey, we analyse the extent to which both the welfare state and social networks have prevented deprivation, as well as the extent to which the functional quality of social networks in inhibiting impoverishment differs as a function of welfare state generosity. Both the ‘crowding out’ and the ‘crowding in’ theses are supported: resources are less mobilized through networks in more generous welfare states precisely because encompassing welfare provisions reduce deprivation significantly, lowering the functional quality of social networks.


Cash by any other name? Evidence on labeling from the UK Winter Fuel Payment

Timothy Beatty et al.
Journal of Public Economics, October 2014, Pages 86–96

Government transfers to individuals are often given labels indicating that they are designed to support the consumption of particular goods. Standard economic theory implies that the labeling of cash transfers or cash-equivalents should have no effect on spending patterns. We study the UK Winter Fuel Payment, a cash transfer to older households. Our empirical strategy nests a regression discontinuity design with an Engel curve framework. We find robust evidence of a behavioral effect of labeling. On average households spend 47% of the WFP on fuel. If the payment were treated as cash, we would expect households to spend 3% of the payment on fuel.


The Long Term Impact of Cash Transfers to Poor Families

Anna Aizer et al.
NBER Working Paper, May 2014

We estimate the long-run impact of cash transfers to poor families on children’s longevity, educational attainment, nutritional status, and income in adulthood. To do so, we collected individual-level administrative records of applicants to the Mothers’ Pension program — the first government-sponsored welfare program in the US (1911-1935) — and matched them to census, WWII and death records. Male children of accepted applicants lived one year longer than those of rejected mothers. Male children of accepted mothers received one-third more years of schooling, were less likely to be underweight, and had higher income in adulthood than children of rejected mothers.


Hard Times in the Land of Plenty: The Effect on Income and Disability Later in Life for People Born During the Great Depression

Melissa Thomasson & Price Fishback
Explorations in Economic History, forthcoming

We use 20th-century data to examine how community economic conditions at the time of birth influenced various measures of socioeconomic success as adults. Our analysis focuses on the worst downturn ever experienced in the United States: the Great Depression. We merge individual information reported by respondents in the U.S. Censuses of 1970 and 1980 with information on state per capita income during the individual’s year of birth in their state of birth. Results indicate that the effect of state income per capita in the birth year on income and disability later in life varies with changes in income levels. Individuals born in the trough of the Depression in low-income states had substantially lower incomes and higher work disability rates later in life than workers born in those states in the peak year of 1929. However, the effect of being born during the trough of the Depression in states with higher incomes during the first half of the 20th century was much weaker on income and disability later in life.


Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection

Will Dobbie & Jae Song
Princeton Working Paper, December 2013

Consumer bankruptcy is one the largest social insurance programs in the United States, but little is known about its impact on debtors. In this paper, we use a new dataset linking 500,000 bankruptcy filings with administrative tax records to estimate the impact of Chapter 13 bankruptcy protection – which provides debt relief and asset protection in exchange for a partial repayment of debt – on subsequent earnings and mortality. Our empirical strategy exploits the fact that U.S. bankruptcy courts use a blind rotation system to assign cases to judges, effectively randomizing filings to judges. Using differences in judge discharge rates as
an instrumental variable, we are able to identify the impact of bankruptcy protection on the marginal recipient. We find that Chapter 13 protection increases annual earnings in the first five post-filing years by $5,012, increases employment over the same time period by 3.5 percentage points, and decreases five-year mortality by 1.9 percentage points. We conclude by using our reduced form estimates to calibrate a general equilibrium model of the credit market, finding that the benefits of consumer bankruptcy are an order of magnitude larger than previously estimated.


The Impact of Parental Layoff on Higher Education Investment

Ben Ost & Weixiang Pan
Economics of Education Review, forthcoming

This paper uses variation in the timing of parental layoff to identify the effect of parental job loss on higher education enrollment. Unlike research that compares laid-off workers to workers who do not lose their jobs, all families in our analysis experience a layoff at some point. The treatment group (layoff when child is 15-17) and control group (layoff when child is 21-23) have statistically indistinguishable initial characteristics, but substantially different higher education enrollment rates. We find that parental job loss between ages 15 and 17 decreases college enrollment by 10 percentage points.


Lower Social Class Does Not (Always) Mean Greater Interdependence: Women in Poverty Have Fewer Social Resources Than Working-Class Women

Nicole Stephens, Jessica Cameron & Sarah Townsend
Journal of Cross-Cultural Psychology, August 2014, Pages 1061-1073

Social resources (i.e., number and nature of relationships with family and friends) are an important, yet largely unrecognized, feature of the sociocultural contexts of social class that influence psychological functioning. To assess the nature and content of social resources, we conducted semistructured interviews with American women living in poverty (n = 21) and working-class (n = 31) contexts. In contrast to previous research, which demonstrates that lower social class contexts foster greater social connection and interdependence than middle-class or upper-class contexts, this study revealed that poverty constitutes a clear cutoff point at which reduced material resources no longer predict higher levels of social connection, but instead social isolation. Our interview data revealed that women in poverty had fewer connections to family and friends, experienced greater difficulty with trust, and reported more challenges involving relationships compared with working-class women. These findings extend psychological theories regarding how social class shapes psychological functioning and have important implications for understanding the maintenance and reproduction of poverty.


The pitfalls of work requirements in welfare-to-work policies: Experimental evidence on human capital accumulation in the Self-Sufficiency Project

Chris Riddell & Craig Riddell
Journal of Public Economics, September 2014, Pages 39–49

This paper investigates whether policies that encourage recipients to exit welfare for full-time employment influence participation in educational activity. The Self-Sufficiency Project (‘SSP’) was a demonstration project where long-term welfare recipients randomly assigned to the treatment group were offered a generous earnings supplement if they exited welfare for full-time employment. We find that treatment group members were less likely to upgrade their education along all dimensions: high-school completion, enrolling in a community college or trade school, and enrolling in university. Thus, ‘work-first’ policies that encourage full-time employment may reduce educational activity and may have adverse consequences on the long-run earnings capacity of welfare recipients. We also find that there was a substantial amount of educational upgrading in this population. For instance, among high-school dropouts at the baseline, 19% completed their diploma by the end of the demonstration. Finally, we simulate the consequences of the earnings supplement in the absence of adverse effects on educational upgrading. Doing so alters the interpretation of the lessons from the SSP demonstration.


Family Structure and Child Food Insecurity

Daniel Miller et al.
American Journal of Public Health, July 2014, Pages e70-e76

Objectives: We examined whether food insecurity was different for children in cohabiting or repartnered families versus those in single-mother or married-parent (biological) families.

Methods: We compared probabilities of child food insecurity (CFI) across different family structures in 4 national data sets: the Early Childhood Longitudinal Study—Birth Cohort (ECLS-B), the Fragile Families and Child Wellbeing Study (FFCWS), the Early Childhood Longitudinal Study—Kindergarten Cohort (ECLS-K), and the Panel Study of Income Dynamics—Child Development Supplement (PSID-CDS).

Results: Unadjusted probabilities of CFI in cohabiting or repartnered families were generally higher than in married-biological-parent families and often statistically indistinguishable from those of single-mother families. However, after adjustment for sociodemographic factors, most differences between family types were attenuated and most were no longer statistically significant.

Conclusions: Although children whose biological parents are cohabiting or whose biological mothers have repartnered have risks for food insecurity comparable to those in single-mother families, the probability of CFI does not differ by family structure when household income, family size, and maternal race, ethnicity, education, and age were held at mean levels.


Do Jobs Work? Risk and Protective Behaviors Associated with Employment among Disadvantaged Female Teens in Urban Atlanta

Janet Rosenbaum et al.
Journal of Women, Politics & Policy, Spring 2014, Pages 155-173

Adolescent employment research has focused on middle-class rather than disadvantaged adolescents. We identified risks and benefits of adolescent employment in a 12-month study of 715 low-socioeconomic-status female African American adolescents using nearest-neighbor Mahalanobis matching on baseline factors including substance use and socioeconomic status. Employed adolescents were more likely to graduate high school and less likely to depend on boyfriends for spending money, but they were more likely to use marijuana, alcohol, and have sex while high or drunk. Employment may help female adolescents avoid potentially coercive romantic relationships, but increase access to drugs or alcohol.


Adrift at the Margins of Urban Society: What Role Does Neighborhood Play?

George Galster, Anna Maria Santiago & Jessica Lucero
Urban Affairs Review, forthcoming

We quantify how social detachment (measured as neither working nor attending school) of low-income African-American and Latino young adults relates to their teen neighborhood conditions. Data come from retrospective surveys of Denver Housing Authority (DHA) households. Because DHA household allocation mimics quasirandom assignment to neighborhoods throughout Denver County, this program represents a natural experiment for overcoming geographic selection bias. Our multilevel, mixed-effects logistic analyses found significant relationships between neighborhood safety and population composition and odds of social detachment of low-income, minority young adults that can be interpreted as causal effects. The strength of these relationships was often contingent on gender and ethnicity, however. We draw conclusions for macroeconomic, income-support, subsidized housing and community development policy.


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