The Right Help

Kevin Lewis

November 25, 2021

Welfare Reform and the Intergenerational Transmission of Dependence
Robert Paul Hartley, Carlos Lamarche & James Ziliak
Journal of Political Economy, forthcoming

We investigate the effect of welfare reform on intergenerational welfare participation, using mother-daughter pairs in the Panel Study of Income Dynamics. We find that a mother’s AFDC/TANF participation increased her daughter’s odds of adult participation in that program by roughly 25 percentage points or more, but that welfare reform attenuated this transmission by at least 50 percent. However, there is no diminution of transmission after welfare reform when we consider the wider safety net or other outcomes. Daughters who grew up with mothers on AFDC/TANF were no better off after reform, with substitution toward other welfare programs over generations. 

The Welfare Effects of Eviction and Homelessness Policies
Boaz Abramson
Stanford Working Paper, November 2021

This paper studies the implications of rental market policies that address evictions and homelessness. Policies that make it harder to evict delinquent tenants, for example by providing tax-funded legal counsel in eviction cases ("Right-to-Counsel") or by instating eviction moratoria, protect renters from eviction in bad times. However, higher default costs to landlords lead to higher equilibrium rents and lower housing supply, implying homelessness might increase. I quantify these tradeoffs in a model of rental markets in a city, matched to micro data on rents and evictions as well as shocks to income and family structure. I find that "Right-to-Counsel" drives up rents so much that homelessness increases by 15% and welfare is dampened. Since defaults on rent are driven by persistent income shocks, making it harder to evict tends to extend the eviction process but doesn't prevent evictions. In contrast, rental assistance lowers tenants' default risk and as a result reduces homelessness by 45% and evictions by 75%. It increases welfare despite its costs to taxpayers. Eviction moratoria following an unexpected economic downturn can also prevent evictions and homelessness, if used as a temporary measure. 

State Spending on Public Benefit Programs and Child Maltreatment
Henry Puls et al.
Pediatrics, November 2021

This was an ecological study of all US states during federal fiscal years 2010–2017. The primary predictor was states’ total annual spending on local, state, and federal benefit programs per person living ≤100% federal poverty limit, which was the sum of (1) cash, housing, and in-kind assistance, (2) housing infrastructure, (3) child care assistance, (4) refundable Earned Income Tax Credit, and (5) Medical Assistance Programs. The main outcomes were rates of maltreatment reporting, substantiations, foster care placements, and fatalities after adjustment for relevant confounders. Generalized estimating equations adjusted for federal spending and estimated adjusted incidence rate ratios (IRRs) and 95% confidence intervals (CIs). 

States’ total spending was inversely associated with all maltreatment outcomes. For each additional $1000 states spent on benefit programs per person living in poverty, there was an associated −4.3% (adjusted IRR: 0.9573 [95% CI: 0.9486 to 0.9661]) difference in reporting, −4.0% (adjusted IRR: 0.903 [95% CI: 0.9534 to 0.9672]) difference in substantiations, −2.1% (adjusted IRR: 0.9795 [95% CI: 0.9759 to 0.9832]) difference in foster care placements, and −7.7% (adjusted IRR: 0.9229 [95% CI: 0.9128 to 0.9330]) difference in fatalities. In 2017, extrapolating $1000 of additional spending for each person living in poverty ($46.5 billion nationally, or 13.3% increase) might have resulted in 181 850 fewer reports, 28 575 fewer substantiations, 4168 fewer foster care placements, and 130 fewer fatalities. 

Blood Money: The Financial Implications of Plasma Sales for Individuals and Non-Bank Lenders
John Dooley & Emily Gallagher
Washington University in St. Louis Working Paper, October 2021 

In the United States, households donate plasma for compensation at a higher rate than they use payday, auto-title, rent-to-own, or pawn loans. Our paper is the first to explore the financial implications for households of plasma donation. Plasma donors tend to be younger and less educated with lower incomes and credit scores; they are also more reliant on non-bank credit. We use dramatic growth in plasma centers between 2014 and 2021 to study the causal effect of the ability to donate plasma on non-bank credit. We find that access to a plasma donation center reduces demand (inquiries) for payday and installment loans by 6.5% and 8.1%, respectively, with larger effects (13.1% and 15.7%, respectively) on younger borrowers. Moreover, foot traffic increases by 7-10% at essential and non-essential goods establishments when a new plasma center opens nearby. Our findings suggest that plasma donation helps households smooth consumption without appealing to high-cost debt. 

Economic Hardship, Sleep and Self-Rated Health: Evidence from the Supplemental Nutrition Assistance Program (SNAP)
Helmut Farbmacher, Maximilian Hartmann & Heinrich Kögel
American Journal of Health Economics, forthcoming

The Supplemental Nutrition Assistance Program (SNAP) distributes vouchers for grocery shopping to around 43 million individuals across the United States to counteract food insecurity. In this study, we take advantage of the random interview day assignment of the American Time Use Survey (ATUS) and the variation in voucher issuance dates across states to identify changes in self-rated health and sleep over the monthly SNAP payment cycle. We find that the economic hardship experienced at the end of the payout period causes a significant and sizeable negative effect on self-assessed physical health and sleep quality. SNAP recipients were 18 percent more likely to report fair or poor physical health at the end of the payment cycle compared to the rest of the month. During this period of scarcity, recipients were also 50 percent more likely to report sleeplessness, with the number of minutes being sleepless more than doubling while total sleep duration remained unchanged. Drawing upon information on time use in the ATUS, we discuss evidence suggesting that higher levels of stress, changed eating patterns, and reduced sleep quality may be potential mechanisms of the adverse health effects. Our findings extend the literature on sleep quality as a mediator between low socio-economic status and self-rated health in the short run. 

School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program
Jessie Handbury & Sarah Moshary
NBER Working Paper, October 2021

We study the private market response to the National School Lunch Program, documenting economically meaningful spillovers to non-recipients. We focus on the Community Eligibility Provision (CEP), an expansion of the lunch program under the 2010 Healthy, Hunger-Free Kids Act. Under the CEP, participating schools offer free lunch to all students. We leverage both the staggered roll-out and eligibility criterion for the CEP, which is limited to schools where at least 40% of students participate in other means-tested welfare programs. We find that local adoption of the CEP causes households with children to reduce their grocery purchases, leading to a 10% decline in grocery sales at large retail chains. Retailers respond with chain-level price adjustments: chains with the most exposure lower prices by 2.5% across all outlets in the years following adoption, so that the program's welfare benefits propagate spatially. Using a stylized model of grocery demand, we estimate that, by 2016, the indirect benefit had reduced grocery costs for the median household by approximately 4.5%. 

The Effect of Free School Meals on Household Food Purchases: Evidence from the Community Eligibility Provision
Michelle Marcus & Katherine Yewell
NBER Working Paper, October 2021

We find evidence that exposure to universal free school meals through the Community Eligibility Provision (CEP) had a meaningful impact on grocery spending for households with children, with monthly food purchases declining by about $11, or 5 percent. For households in zip codes with higher exposure, the decline is as high as $39 per month, or 19 percent. We also show evidence that the composition of food purchases changes, with low income households experiencing an increase in the dietary quality of their food purchases by about 3 percent after CEP. Finally, we show CEP exposure is associated with an 11 percent decline in the percent of households that ran short of money or tried to make their food money go further, and an almost 5 percent decline in households classified as food insecure. Our results on the heterogeneous effects of CEP exposure by prior free/reduced price lunch eligibility reveal large benefits in terms of both spending, dietary composition, and food insecurity for previously eligible low-income families, suggesting that the stigma of free school meals may be declining after universal access. 

Program Recertification Costs: Evidence from SNAP
Tatiana Homonoff & Jason Somerville
American Economic Journal: Economic Policy, November 2021, Pages 271-298

Participants in means-tested programs must periodically document eligibility through a recertification process. If all cases that fail recertification are ineligible, the exact timing of this process should be irrelevant. We find that later recertification interview assignments for the Supplemental Nutrition Assistance Program (SNAP), which leave less time to reschedule missed interviews, decrease recertification success by 22 percent. The consequences of not recertifying due to later interviews are highly skewed: most cases quickly reenroll, while one-quarter remain off SNAP for over a year. The marginal disenrolled case is as needy as the average participant, suggesting inefficient screening from late interviews.


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