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IRP Discussion Paper Abstracts - 2008

Full Text: DP 1360-08

This paper analyzes the effect of participation in the School Breakfast Program (SBP) on breakfast consumption using time-diary data from the Child Development Supplement of the Panel Study of Income Dynamics. Participation effects are identified by comparing differences in breakfast patterns between weekdays (when children are in school) and weekends (when they are not), for program participants versus nonparticipants. Results suggest that the SBP is associated with a significant reduction in the likelihood of eating breakfast. Additional analyses of the availability of the SBP in schools and adjustments for the quality of the time-diary data fail to alter this basic result. A plausible interpretation of this counter-intuitive result is that, contrary to parents’ expectations, participating children may not actually be eating the breakfasts provided at school.

Full Text: DP 1359-08

This paper evaluates the health impact of a signature initiative of the War on Poverty: the rollout of the modern Food Stamp Program (FSP) during the 1960s and early 1970s. Using variation in the month the FSP began operating in each U.S. county, we find that pregnancies exposed to the FSP three months prior to birth yielded deliveries with increased birth weight, with the largest gains at the lowest birth weights. These impacts are evident with difference-in-difference models and event study analyses. Estimated impacts are robust to inclusion of county fixed effects, time fixed effects, measures of other federal transfer spending, state by year fixed effects, and county-specific linear time trends. We also find that the FSP rollout leads to small, but statistically insignificant, improvements in neonatal infant mortality. We conclude that the sizeable increase in income from Food Stamp Program benefits improved birth outcomes for both whites and African Americans, with larger impacts for births to African American mothers.

Full Text: DP 1358-08

In this paper I review what we have learned about living wage laws and their impacts on the wages, employment, and poverty rates of low-wage workers. I review the characteristics of these laws and where they have been implemented to date, and what economic theory tells us about their likely effects in more and less competitive labor markets. I then review two bodies of empirical evidence: (1) studies across cities or metropolitan areas that have and have not implemented these laws, using data from the Current Population Survey pooled over many years; and (2) studies within particular cities, based on comparisons of covered and uncovered workers before and after the laws are passed. I conclude that living wage laws have modestly raised wage levels of low-wage workers and have reduced their employment at covered firms, but that the magnitudes of both effects are likely quite small, given how few workers are usually covered by these ordinances.

Full Text: DP 1357-08

The conceptualization and measurement of key job characteristics has not changed greatly for most social scientists since the Dictionary of Occupational Titles and Quality of Employment surveys were created, despite their recognized limitations. However, debates over the roles of job skill requirements, technology, and new management practices in the growth of inequality have led to renewed interest in better data that directly addresses current research questions. This paper reviews the paradigms that frame current debates, introduces new measures of job content designed specifically to address the issues they raise from the survey of Skills, Technology, and Management Practices (STAMP), and presents evidence on validity and reliability of the new measures.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

In 2007, Mollie Orshansky, whose contributions led to the nation's official poverty measure, passed away. Given the data available in the early-1960s, the Orshansky poverty measure—based on family money income and an absolute poverty threshold—made perfect sense. President Johnson had declared a War on Poverty in 1964, and the nation needed a statistical picture of the poor. Since this time, the U.S. official poverty measure has stood nearly unchanged. This, in spite of extensive efforts designed to improve the measurement of both financial means and the poverty threshold.

In this paper, the author attempts to broaden the discussion of poverty and poverty measurement. He first discusses the broad question of "what is poverty?" and describes various poverty concepts that have been proposed. He then describes the official U.S. poverty measure, highlights its main characteristics, and notes some of the criticisms directed toward it. Finally, he examines broader conceptions of poverty and deprivation. The paper ends with a modest proposal for the development of a broader measure of poverty and social exclusion for the United States.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

In 1992, "ending welfare as we know it" was an important theme in Bill Clinton's presidential campaign. It polled well, and was consistent with other aspects of the New Democrat agenda that Clinton was campaigning on, an agenda that also included "making work pay" and "reinventing government." Candidate Clinton talked a good deal about welfare in the context of an approach to poverty that emphasized work and responsibility.

In May 2008, when Hillary Clinton and Barack Obama were neck and neck for the Democratic nomination, neither of their campaign issues Web sites mentioned welfare. Both had issue papers on poverty, Clinton's a sub-topic under the broad issue of "Strengthening the Middle Class," Obama's one of twenty issue areas. John McCain, the presumptive Republican nominee, included neither poverty nor welfare in his list of important issues, though he did have an economic plan that included proposals directed at the struggling middle class.

Much has happened in politics and policy around poverty and welfare after and to some extent because of Clinton's 1992 campaign agenda. In this paper, the author addresses three questions: What changed in policy, practice and the lives of the poor? What changed, if anything, in public opinion and the political context around poverty and welfare? What are the prospects and the best political strategies for improvement in the lives of the poor going forward from 2008?

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

Americans' efforts to help poor people obtain medical care have evolved as the country has grown richer and as medicine has become capable of increasing life-expectancy and improving quality of life. The evolution has not been a direct path of increased generosity towards poor people. Instead, it reflects a mix of philosophical beliefs, greater understanding of the links between health and ability to work, and swings in the economy that have made Americans alternately more and less willing to help pay for poor people's medical care.

This paper focuses on the recent history of public policies intended to help the poor obtain health care, including the concerns now surrounding public insurance. The first half of the paper (Section II) provides a brief review of efforts to provide health care to the poor since 1900. The second half shifts to examining current concerns with Medicaid and SCHIP and issues that should be addressed in continuing efforts to provide health care to the poor and near-poor. The third section focuses on recent and current efforts to control and slow the spending for Medicaid and SCHIP. In the fourth section, the author examines four concerns with the current operation of Medicaid and SCHIP. The author concludes with observations about the inconsistency in our attitudes towards helping poor people with health care costs and she offers three recommendations for improving health care outcomes for low-income people.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

Over the past few decades, the gaps in earnings between more- and less-educated American workers have risen. The number of adult workers in low-wage jobs has risen—partly because of the growing supply of these workers, associated with welfare reform and immigration (among other forces), and partly because of growing demand for these workers in low-paying jobs. And, at least among less-educated and minority men, the numbers with criminal records and other characteristics that make them "hard to employ" has risen dramatically as well.

In this paper the author addresses the following questions: Why has support for workforce development policies fallen so far as an antipoverty strategy? What are the most recent developments in the field, and what is the state of knowledge about their success? Is a resurgence of interest in workforce development for the poor merited? And, for low-wage workers for whom workforce development is unlikely to be a successful option, what other policies might work? He concludes with some thoughts on what a workforce development agenda might include, and what is needed for such an agenda to succeed.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

One of the best ways to avoid being poor as an adult is to obtain a good education. Individuals with higher academic achievement and more years of schooling earn more than those with lower levels of human capital. This is not surprising given that we believe that schooling makes people more productive, allowing them to command higher wages in the labor market.

This paper offers a message of tempered optimism in contrast to a sense of pessimism about the ability of schools to lift poor children's life chances. The past few decades have seen a dramatic improvement in the technology of education policy evaluation, which has enhanced our ability to uncover moderately-sized program impacts within the complex environment that determines schooling outcomes. The available evidence reveals a number of potentially promising ways to improve the learning outcomes of low-income children. This is not to say that everything works: many current and proposed education policies either enjoy no empirical support for their effectiveness, or in some cases have strong empirical evidence for their ineffectiveness. But a careful sifting of the empirical evidence identifies a selected set of interventions that seem to be promising.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

Families are changing. In 1975, two-thirds of American children had a stay-at-home parent. Today only about a quarter of children do (20 percent live with two parents, only one of whom works; while 6 percent live with a single parent or married parents who do not work; see Table 1). Fully half live with two parents who both work, while a quarter (24 percent) live with a single parent who works.

This paper considers the role various types of family policy might play in reducing poverty among families with children. The first section focuses on work-family policies that help parents address the conflict between the demands associated with working and those associated with caring for children. The second section discusses several types of income support policies, including universal child allowances that raise incomes for all families with children, and child-focused earnings supplements targeted to low-income families (such as the EITC). The third section considers policies that address the disproportionate risk of poverty facing single-parent families.

(Full text available–differs from book chapter in Changing Poverty, Changing Policies)
Full Text: DP 1350-08

Antipoverty programs are designed to mitigate the most pernicious aspects of market-based economic outcomes—unemployment, disability, low earnings, and other material hardship. These programs compose society's "safety net" and each has different eligibility standards and benefit formulas. While they can be aggregated and categorized to summarize trends in coverage and generosity, a consequence of their patchwork nature is that the safety net may appear different to a family in one set of circumstances than it does to a family in another.

The authors have three primary goals in this paper. First, they provide updated information on expenditures and recipients for a range of antipoverty programs, describing the evolution of the safety net over the past thirty-five years. Second, they use data from the Survey of Income and Program Participation (SIPP) to calculate the antipoverty effectiveness of federal programs for families and individuals in different circumstances. Third, they explore changes in the characteristics of recipients of means-tested transfers, tax credits and social insurance.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

The United States has a much more unequal distribution of income than most developed nations. In fact, although it has one of the highest standards of living on average, as measured by its gross domestic product per capita, the more unequal income distribution translates into comparatively high rates of both relative poverty (50 percent of median disposable income) and absolute poverty (the official US poverty thresholds).

This paper examines the dynamics of poverty in the United States in light of evidence from other developed nations. The author begins by examining poverty mobility in the United States based on monthly incomes. The proportion of those who have below-poverty-level income in two or more months is much greater than poverty based on annual income, so the experience of poverty is in some sense much more common than annual figures suggest. Similar background factors—belonging to a racial minority or living in a female-headed household—are associated with higher short-term, annual, and long-term poverty.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

Poverty is a common experience for children growing up in the United States. Although only about one in five children are in poverty each year, roughly one in three will spend at least one year living in a poor household. Child poverty is a significant concern to researchers and policymakers because early childhood poverty is linked to a multitude of worse outcomes, including reduced academic attainment, higher rates of non-marital child bearing, and a greater likelihood of health problems. Moreover, childhood poverty, especially when it is deep and persistent, increases the chances that an individual will be poor as an adult, thereby giving rise to the intergenerational transmission of economic disadvantage.

In this chapter the authors review research on the dynamics of child poverty and the influences of poverty on development during childhood and early adulthood in the United States. They begin by describing trends in child poverty. Next, they present three dominant frameworks for understanding the influences of poverty on families and discuss challenges faced by researchers interested in measuring causal effects. Then they review studies that estimate childhood poverty's influence on development in three domains: educational attainment and achievement, behavior, and physical health. They conclude by discussing policies that show promise in attenuating the links between childhood poverty and development across the life course.

(Full text available–differs from book chapter in Changing Poverty, Changing Policies)
Full Text: DP 1347-08

In this paper, the authors assess the likely contribution of immigration over the past three and a half decades to poverty in the U.S. They first document trends in poverty rates among the native-born by race and ethnicity and poverty trends among all immigrants, recent immigrants, and immigrants by their region and (in some instances) country of origin. Next, they assess how poverty rates among immigrants change with time in the United States. Finally, they simulate the effects of competition with immigrant labor on native wages and the likely consequent effects on native poverty rates.

The authors find that international immigration to the U.S. between 1970 and 2005 has increased the overall poverty rate due to the facts that (1) immigrants are more likely to be poor and (2) an increasing proportion of the U.S. resident population is foreign born. This effect, however, is modest (it increases U.S. poverty rates by half a percentage point) and transitory, as immigrant poverty rates decline quickly with time in the U.S. The authors' wage simulations indicate that competition with immigrants does adversely impact those natives, and only those natives, with the least education. However, the impact of wage competition with immigrants on native poverty rates is negligible.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

The correlation between family structure and economic well-being is well established. Poverty rates vary dramatically by family structure; in 2006 about 8 percent of married couples with children, 40 percent of single mother families, and 14 percent of single father families were poor. Eligibility for income support programs, including cash welfare, food stamps, and the Earned Income Tax Credit, are tied to family composition. Moreover, in recent years policymakers have sought not only to respond to family changes, but to try to influence the decisions people make about marriage, divorce, and childbearing. Poverty policies and family policies are increasingly tied.

This paper examines changes since 1970 in family structure and their implications for poverty and income support policy. The authors discuss changes in marriage and childbearing and their implications for the living situations of children, such as the increasing proportion of children living with a single mother. They also highlight differences in work and earnings by marital and parental status, such as the substantial increase in the employment rates of single mothers with young children.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

The primary source of support for most non-elderly adults comes from their employment and earnings. Hence, understanding the availability of jobs and the wages paid to less-educated workers is key to understanding changes in the well-being of low-income populations. Expansions and contractions in the macroeconomy influence unemployment rates, wages, and overall economic growth, all of which are important determinants of the economic circumstances facing low-income families.

This chapter focuses on the trends in labor market and macroeconomic circumstances that particularly affect less-educated and low wage workers. The first section looks at changes in work behavior among individuals by skill level; the second, at unemployment and job availability. The third section investigates trends in earnings and discusses the reasons behind substantial earnings shifts among less-educated men and women since 1980. The fourth section looks at the most disadvantaged families and investigates the relationship between macroeconomic and labor market factors and poverty rates. The final section discusses policy implications.

(Conference paper and chapter in Changing Poverty, Changing Policies volume)

In 2006, 42 years after President Johnson proclaimed war on poverty, the rate of poverty according to the official measure was 12.3 percent, about the same as it was in the late-1960s. A poverty measure that incorporates additional income sources shows somewhat lower poverty, 11.4 percent, but if a relative measure (that incorporates changes in the standard of living over time) is used, poverty in 2006 would be 16.0 percent. Regardless of the exact rate, it is clear that the struggle against poverty has been protracted and difficult, and, despite a variety of social policy changes, very little progress has been made. This paper reviews the way in which poverty is officially measured in the U.S., examines which groups are most affected and how poverty has changed over time, and concludes with a comparison of U.S. poverty rates with those of other countries. The authors end with the suggestion that "perhaps it is time for a renewed war on poverty, this time fought with new commitments and different policy weapons."

Full Text: DP 1343-08

With over 66 percent of Americans overweight and subject to admonishments to lose weight, there is one segment of the population that is set apart—expectant mothers—because they are encouraged to gain weight while pregnant. Food Stamp benefits (FSBs) may facilitate recommended weight gain for pregnant women by providing additional resources for food and nutrition. I examine the effects of FSBs on the amount of weight gained by low-income expectant mothers using NLSY79 data. Results indicate FSBs decrease the probability of gaining an insufficient amount of weight but do not exacerbate the probability of gaining too much weight. Examining the effects of FSBs on pregnancy weight gain is important because low birth weight is more likely when expectant mothers gain an insufficient amount of weight.

Full Text: DP 1342-08

Knowledge of the degree of intergenerational mobility in an economy is essential for assessing the fairness of the earnings distribution. In this paper, we provide estimates of the degree of intergenerational mobility in the United States using administrative earnings data from the Social Security Administration's records. These data contain nearly career-long earnings histories for a large sample of U.S. fathers, and their children's earnings around an age that is likely to be a good proxy for lifetime earnings. We examine two different measures of mobility: (1) the association between fathers' and children's log earnings (the intergenerational elasticity or IGE) and (2) the association between fathers' and children's relative positions in their respective earnings distributions (or the intergenerational rank association or IRA). We show that estimates of the IGE are quite sensitive to choice of specification and sample and range from 0.26 to 0.63 for sons and from 0 to 0.27 for daughters. That is, a 10 percent increase in fathers' earnings is associated with a 3 percent to 6 percent increase in sons' earnings and a 0 percent to 3 percent increase in daughters' earnings. By contrast, our estimates of the IRA are robust to both specification and sample choices and show that a 10 percentile increase in a father's relative position is associated with roughly a 3 percentile increase in his son's and roughly a 1 percentile increase in his daughter's relative earnings positions. Nonparametric estimates of the IRA show relatively more immobility among the children of men below the 10th percentile and above the 80th percentile of lifetime earnings.

Full Text: DP 1341-08

Given its favorable employment incentives and ability to target the working poor, the Earned Income Tax Credit (EITC) has become the primary antipoverty program at both the federal and state levels. However, when evaluating the effect of EITC programs on income and poverty, governments generally calculate the effect using simple accounting, where the value of the state or federal EITC benefit is added to a person's income. These calculations omit the behavioral incentives created by the existence of these programs, the corresponding effect on labor supply and hours worked, and therefore the actual effect on income and poverty. This paper simulates the full effect of an expansion of the New York State EITC benefit on employment, hours worked, income, poverty, and program expenditures. These results are then compared to those omitting labor supply effects. Relative to estimates excluding labor supply effects, the preferred behavioral results show that an expansion of the New York State EITC increases employment by an additional 14,244 persons, labor earnings by an additional $95.8 million, family income by an additional $84.5 million, decreases poverty by an additional 56,576 persons, and increases costs to the state by $29.7 million. These results emphasize the importance of modeling labor supply behavior when analyzing the impact of the EITC.

Full Text: DP 1340-08

Many empirical questions in economics and other social sciences depend on causal effects of programs or policies. In the last two decades much research has been done on the econometric and statistical analysis of the effects of such programs or treatments. This recent theoretical literature has built on, and combined features of, earlier work in both the statistics and econometrics literatures. It has by now reached a level of maturity that makes it an important tool in many areas of empirical research in economics, including labor economics, public finance, development economics, industrial organization and other areas of empirical micro-economics. In this review we discuss some of the recent developments. We focus primarily on practical issues for empirical researchers, as well as provide a historical overview of the area and give references to more technical research.

Full Text: DP 1339-08

The rising rate of obesity has reached epidemic proportions and is now one of the most serious public health challenges facing the US. However, the underlying causes for this increase are unclear. This paper examines the effect of family income changes on body mass index (BMI) and obesity using data from the National Longitudinal Survey of Youth 1979 cohort. It does so by using exogenous variation in family income in a sample of low-income women and men. This exogenous variation is obtained from the correlation of their family income with the generosity of state and federal Earned Income Tax Credit (EITC) program benefits. Income is found to significantly raise the BMI and probability of being obese for women with EITC-eligible earnings, and have no appreciable effect for men with EITC-eligible earnings. The results imply that the increase in real family income from 1990 to 2002 explains between 10 and 21 percent of the increase in sample women's BMI and between 23 and 29 percent of their increased obesity prevalence.

Full Text: DP 1338-08

The federal Section 8 housing program provides eligible low-income families with an income-conditioned voucher that can be used to lease privately owned, affordable rental housing units. This paper extends prior research on the effectiveness of housing support programs in several ways. We use a quasi-experimental, propensity score matching research design, and examine the effect of housing voucher receipt on neighborhood quality, earnings, and work effort. Results are presented for a wide variety of demographic groups for up to five years following voucher receipt. The analysis employs a unique longitudinal dataset that was created by combining administrative records maintained by the State of Wisconsin with census block group data. The results of our propensity score matching procedure show voucher receipt to have no effect on neighborhood quality in the short-term, but positive long-term effects. Furthermore, the results indicate that on average voucher receipt causes lower earnings in the initial years following receipt, but that these negative earnings effects dissipate over time. Finally, we find that recipient responses to voucher receipt differ substantially across demographic subgroups.

Full Text: DP 1337-08

We look at the impact of a binding minimum wage on labor market outcomes and welfare distributions in a partial equilibrium model of matching and bargaining in the presence of on-the-job search. We use two different specifications of the Nash bargaining problem. In one, firms engage in a Bertrand competition for the services of an individual, as in Postel-Vinay and Robin (2002). In the other, firms do not engage in such competitions, and the outside option used in bargaining is always the value of unemployed search. We estimate both bargaining specifications using a Method of Simulated Moments estimator applied to data from a recent wave of the Survey of Income and Program Participation. Even though individuals will be paid the minimum wage for a small proportion of their labor market careers, we find significant effects of the minimum wage on the ex ante value of labor market careers, particularly in the case of Bertrand competition between firms. An important futures goal of this research agenda is to develop tests capable of determining which bargaining framework is more consistent with observed patterns of turnover and wage change at the individual level.

Full Text: DP 1336-08 (For copies of this paper, please contact the author Robert Plotnick)

Using the Health and Retirement Survey, this study examines the relationship between childlessness and four indicators of elders' economic well-being: income, receipt of disability and income-tested benefits, and wealth. The study estimates separate models for currently married persons, currently single women, and currently single men using standard OLS and logit, quantile regression, linear and logit random effects, and two propensity score models. Compared to married parents, childless married couples tend to have slightly more income and about 5 percent more wealth. Unmarried childless men enjoy no income advantage over unmarried fathers, but have 24–35 percent more wealth. Childlessness has the strongest relationship with unmarried women's economic well-being. Compared to elderly unmarried mothers, unmarried childless women have, on average, 13–31 percent more income and about 35 percent more wealth. The strength of these relationships tends to increase as one moves up the distribution of income or wealth, especially for unmarried women. Childless unmarried men are more likely to use income-tested benefits while childless unmarried women are less likely to do so.

Full Text: DP 1335-08

Temporary Help Services (THS) firms are increasing their hiring of disadvantaged individuals and claiming more subsidies for doing so. Do these subsidies—the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW)—create incentives that improve employment outcomes for THS workers? We examine the distinct effects of THS employment and WOTC/WtW subsidies using administrative and survey data. Results indicate that WOTC/WtW-certified THS workers have higher earnings than WOTC-eligible but uncertified THS workers. However, these workers have shorter job tenure and lower earnings than WOTC/WtW-certified workers in non-THS industries. Panel estimates suggest that these effects do not persist over time.

Full Text: DP 1334-08

The reform of the cash-based welfare program for single mothers in the US which occurred in the 1990s was the most important since its inception in 1935. The reforms imposed credible and enforceable work requirements into the program for the first time, as well as establishing time limits on lifetime receipt. Research on the effects of the reform have shown it to have reduced the program caseload and governmental expenditures on the program. In addition, the reform has had generally positive average effects on employment, earnings, and income, and generally negative effects on poverty rates, although the gains are not evenly distributed across groups. A fraction of the affected group appears to have been made worse off by the reform.

Full Text: DP 1333-08

It is generally believed that the existing human services structure is most accurately described as an array of potentially related programs that deliver distinct benefits or services to narrowly defined target populations. Each program can be thought of as representing a service silo: a separate and distinct funnel through which money, regulations, and professional norms, and expectations flow. While some overlap across silos has always existed, each usually operates in a relatively self-contained manner. As a whole, the configuration of services available to support and assist families in their efforts to become self-sufficient can be complex, confusing, redundant, and incoherent. The opposite of this silo-based approach to organizing and delivering human services is often coined 'systems integration.' What exactly is systems integration? Building on lessons learned from the field, the authors conclude that, although it is not possible to create one all-encompassing definition of 'service integration,' it is possible to develop an overarching, conceptual framework for understanding and analyzing the essential process involved in such efforts to simplify and transform the service experience of target populations. This paper identifies the heterogeneity that exists across these efforts and from it develops a set of organizing principles and constructs for planning a service integration initiative. First, it elaborates on two key dimensions—relationship intensity and institutional similarity—critical for understanding any particular integration effort. Second, it proposes a strategy for framing integration efforts based on these two dimensions. Third, it considers the implications of this framework for developing an integration agenda. Finally, it identifies the basic components of all integration efforts within the context of a dynamic, rather than static, operating environment.