IRP Discussion Paper Abstracts - 2010
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Full Text: DP 1388-10
Data from 76 experimental welfare-to-work programs conducted in the United States between 1983 and 1998 are used to investigate whether the impacts of such programs on employment had been improving over time and whether specific program features influencing such changes can be identified. Over the period, an increasing percentage of control group members received services similar to those offered to program group members. As a result, differential participation in program service activities between program and control group members decreased steadily over time. This reduction in the net receipt of program services tended to reduce the impact of these programs on employment. However, the negative influence of the reduced incremental services was offset by other factors that resulted in program impacts remaining essentially constant from 1983 to 1998. Suggestions are made for possibly improving program impacts in future experiments.
Full Text: DP 1387-10
Many believe that the welfare state undermines productivity, economic growth and development; that the United States has an unusually small welfare state; and finally that the United States is and always has been a welfare state laggard. This paper shows that all three propositions are false when one includes education along with cash benefits and health care support as part of the welfare state. We argue that the social programs that constitute the welfare state complement capitalism and enrich nations. The American welfare state is not unusually small, but, it is peculiar in its reliance upon the combination of employer-provided benefits and weak cash benefit programs for the poor. Finally, the United States rather than always being a laggard in welfare state development was a leader in the provision of public education for most of its history, but now lags behind other rich nations.
Full Text: DP 1386-10
The Earned Income Tax Credit (EITC) has been found to lead to increases in employment and earnings growth for low-educated women. That increased employment and earnings may result in a greater fraction of those women qualifying for Social Security benefits and their receiving a higher benefit in the event they do qualify. In this study, we determine the extent to which the labor supply responses to the EITC will improve the financial security of low-income women when they near retirement age. We use data from the 1993 and 1996 SIPP-SSA matched data files and the CWHS to estimate the impact of EITC expansions on employment, quarters of coverage, and earnings growth. Earlier research exploited the differential expansions in the credit for single mothers with two or more qualifying children and for single mothers with only one child. Those results, consistent with our earlier work, show that the EITC increased both employment and earnings growth of single mothers in the 5 years following expansion. We then simulate the impact of EITC expansion on the Average Indexed Monthly Earnings (AIME) amount and the Primary Insurance Amount (PIA) of a sample of low-educated women. The results show that the EITC increases the share of women who are eligible for Social Security retirement benefits by between 2% and 3%. Further, we find that lifetime earnings increase by between 6% and 17% and the AIME by a similar amount.
Full Text: DP 1385-10
Over six million children were reported to the child welfare system as being at risk of child abuse or neglect in the United States in 2008. Researchers and policymakers have long recognized that children living in families with limited economic resources are at higher risk for maltreatment than children from higher socioeconomic strata, but the causal effect of income on maltreatment risk is unknown. Because many factors, for example, poor parental mental health, are known to increase the probability both of poverty and child maltreatment, teasing out the causal role of income can be challenging. Using newly available data, we exploit a random assignment experiment that led to exogenous differences in family income to measure the effect of income on the risk of maltreatment reported to the child welfare system. We find consistent evidence of a causal effect.
Full Text: DP 1384-10
A comprehensive health care reform bill was passed by the U.S. Congress and signed into law by President Obama on March 23, 2010. In this brief paper, we attempt to convey the existing structure of the U.S. health care system, to identify its major weaknesses, to describe the primary new features introduced by the act, and to offer our overall appraisal of the reform.
Today’s pre-reform U.S. health care system produces a huge volume of services–as of 2007, expenditures had reached $2.2 trillion or 16.2 percent of the nation’s GDP. These services are often distributed inefficiently and inequitably, and both per capita costs and total cost relative to GDP exceed those of other developed nations.
The health care reform includes expansion of the Medicaid program (in 2014) to cover everyone with income below 133 percent of the federal poverty line; and those with low to moderate incomes will receive subsidies to achieve increased coverage and access. By 2014, private insurers will no longer be able to exclude any person with a preexisting condition from coverage or charge them more for coverage. Tax credits starting at 35 percent and going up to 50 percent will be given to small firms. The U.S. private health insurance market will be fundamentally changed by the introduction of a set of organized Health Insurance Exchanges, which will be established in each state (or in groupings of states), and will require insurers to offer four standard packages of benefits.
The 2010 legislation sets several constraints designed to reduce inefficiencies in the operation of the system; reduce complexity in health care choices; and expand and restructure existing public programs. The changes introduced by the reform are enormous. Health care coverage will be provided to an additional 32 million Americans, reducing the uninsured population from about 12 percent to 6 percent of the population. Of course, problems will remain, and uncertainties in implementation are pervasive. Nevertheless, gains in the form of movement toward near universal coverage, a lower rate of increase in health care costs, and a realignment of incentives for cost-effective decisions by providers, insurers, and consumers are major gains attributable to the reform.
This article will appear in Smeeding, Timothy, Irwin Garfinkel, and Ronald Mincy, eds. "Young Disadvantaged Men: Fathers, Families, Poverty, and Policy," The Annals of the American Academy of Political and Social Science 635 (May 2011).
This paper introduces the major themes associated with young disadvantaged men, including low educational achievement, joblessness, out-of-wedlock childbearing, and incarceration. By age 30, between 68 percent and 75 percent of young men with a high school degree or less are fathers (NLSY). Half of them are married when their first child is born and far fewer continue their education post-high school. The paper briefly reviews four major forces that help shape social and economic outcomes for young men who are fathers and for their partners and children: employment and earnings prospects; multiple-partner fertility; incarceration; and finally public policy, especially as it is reflected in the income support system and the child support system. The paper provides brief synopses of volume chapters to appear in The Annals of the American Academy of Political and Social Science in 2011. It ends with an exploration of policy solutions to the many challenges facing young disadvantaged men.
Full Text: DP 1382-10
Economists have devoted considerable resources to estimating local average treatment effects of expansions in Medicaid eligibility for children. In this paper we use random coefficients linear probability models and switching probit models to estimate a more complete range of effects of Medicaid expansion on Medicaid take-up and crowd-out of private insurance. We demonstrate how to estimate, for Medicaid expansions, the average effect among all of those eligible, the average effect for a randomly chosen person, the effect for a marginally eligible child, and the average effect for those affected by a nonmarginal counterfactual policy change. We then estimate the average effect of Medicaid expansions among all eligible children and the average effect for those affected by a nonmarginal counterfactual Medicaid expansion, since these are likely to be the most useful for policy analysis. Estimated take-up rates among average eligible children are substantially larger than take-up rates for those made eligible by a counterfactual Medicaid expansion; moreover, both of these effects vary widely across demographic groups. In terms of crowd-out, we find statistically significant, though small, effects for all eligible children, but not for those affected by a counterfactual policy change.
Full Text: DP 1381-10
Federal and state governments spend well over a billion dollars a year on programs that encourage employment development in disadvantaged labor markets through the use of subsidies and tax credits. In this paper we use an estimation approach that is valid under relatively weak assumptions to measure the impact of State Enterprise Zones (ENTZs), Federal Empowerment Zones (EMPZs), and Federal Enterprise Community (ENTC) programs on local labor markets. We find that all three programs have positive, statistically significant, impacts on local labor markets in terms of the unemployment rate, the poverty rate, the fraction with wage and salary income, and employment. Further, the effects of EMPZ and ENTC designation are considerably larger than the impact of ENTZ designation. We find that our estimates are robust to allowing for a regression to the mean effect. We also find that there are positive, but statistically insignificant, spillover effects to neighboring Census tracts of each of these programs. Thus our positive estimates of these program impacts do not simply represent a transfer from the nearest non-treated Census tract to the treated Census tract.
Our results are noteworthy for several reasons. First, our study is the first to jointly look at these three programs, thus allowing policy makers to compare the impacts of these programs. Second, our paper, along with a concurrent study by Neumark and Kolko (2008), is the first to carry out the estimation accounting for overlap between the programs. Third, our estimation strategy is valid under weaker assumptions than those made in many previous studies; we consider three comparison groups and let the data determine the appropriate group. Fourth, in spite of our conservative estimation strategy, by looking at national effects with disaggregated data, we show that ENTZ designation generally has a positive effect on the local labor market, while most previous research on ENTZs, much of which used more geographically aggregated data to look at state-specific effects, did not find any significant impacts. Fifth, we note that there is little or no previous work on ENTCs. Overall, our results strongly support the efficacy of these labor market interventions.
Full Text: DP 1380-10
The Section 8 housing voucher program serves nearly 2 million low-income families in the United States. The purpose of the program is to enable low-income families to improve the quality of their housing and to move to better neighborhoods. Voucher recipients seek housing in the private rental market, and use the voucher to subsidize their rent. In this paper, the authors provide estimates of the social benefits and costs of the Section 8 housing subsidy program. The authors find that the Section 8 program meets the efficiency standard of positive net benefits. For society as a whole, total benefits (measured in annual, per recipient units) range from about $7,700 to $9,600, while total costs are about $7,000; net benefits range from about $650 to $2,800 per recipient case per year. The social benefit-cost ratio ranges from 1.1 to 1.37. The bulk of the benefits are experienced by voucher recipients, while other members of society bear the bulk of the costs. The authors conclude that the program meets the efficiency standard of welfare economics.
Full Text: DP 1379-10
Despite declines in racial segregation across most U.S. metropolitan areas in recent years, racial and ethnic minorities still display uneven geographic access to jobs. In this article, the authors provide a detailed analysis of the factors driving racial and ethnic gaps in spatial mismatch conditions across U.S. metropolitan areas. Using data primarily from the 1990 and 2000 U.S. Censuses, and the 1994 and 1999 Economic Censuses, and the Zip Code Business Pattern files, we generate descriptive, multivariate, and decompositional evidence to address why blacks and to a lesser extent Latinos display greater degrees of spatial mismatch than whites. The results indicate that racial segregation in housing markets, among many other factors including job sprawl, is the most important factor. The authors’ models indicate that racial differences in spatial mismatch conditions, particularly between blacks and whites, should be eliminated in 45 to 50 years should racial segregation levels continue to decline in the future at similar rates observed over the 1990s.
Full Text: DP 1378-10
Tolls are an increasingly popular policy tool for achieving functionality, affordability and environmental responsiveness in urban transportation systems. Alongside their benefits, tolls’ impacts on equity require scrutiny. Prior studies of road users find that tolls are regressively distributed, costing low-income households a higher percentage of their income than wealthier households. Using data from the Puget Sound metropolitan region in Washington State, we advance the literature by 1.) using Geographic Information Systems methods to map commuting routes, and then 2.) simulating the effects of possible toll regimes on different universes of households, including those who use tolled facilities as well as those who do not. By omitting the many low-income households without workers or who commute using public transportation or untolled routes, prior studies overstate tolls’ regressivity. We find that tolls are regressive but the degree of regressivity is sensitive to the set of households included in the analysis.
This article will appear in Smeeding, Timothy, Irwin Garfinkel, and Ronald Mincy, eds. "Young Disadvantaged Men: Fathers, Families, Poverty, and Policy," The Annals of the American Academy of Political and Social Science 635 (May 2011).
Both wages and labor force participation have been declining for young, less-educated men since the mid-1970s. The purpose of this article is to examine how key income-security policy areas–including unemployment insurance, payroll taxes and the Earned Income Tax Credit, and child support enforcement–affect these men. The article concludes with policy recommendations to improve the impact of work-based subsidies on poverty among low-income men. Subsidized jobs in transitional job programs could play a critical role in helping these men access these subsidies.
This article will appear in Smeeding, Timothy, Irwin Garfinkel, and Ronald Mincy, eds. "Young Disadvantaged Men: Fathers, Families, Poverty, and Policy," The Annals of the American Academy of Political and Social Science 635 (May 2011).
As described in earlier articles, children whose parents have higher income and education levels are more likely to grow up in stable two-parent households than their economically disadvantaged counterparts. These widening gaps in fathers’ involvement in parenting and in the quality and stability of parents’ relationships may reinforce disparities in outcomes for the next generation. This paper reviews evidence about the effectiveness of two strategies to strengthen fathers’ involvement and family relationships–fatherhood programs aimed at disadvantaged noncustodial fathers and relationship skills programs for parents who are together. Fatherhood programs have shown some efficacy at increasing child support payments, while relationship skills approaches have shown benefits for the couples’ relationship quality, coparenting skills, fathers’ engagement in parenting, and children’s well-being. The research evidence suggests that parents’ relationship with each other should be a fundamental consideration in future programs aimed at increasing low-income fathers’ involvement with their children.
This article will appear in Smeeding, Timothy, Irwin Garfinkel, and Ronald Mincy, eds. "Young Disadvantaged Men: Fathers, Families, Poverty, and Policy," The Annals of the American Academy of Political and Social Science 635 (May 2011).
This chapter addresses the reentry challenges faced by low-skilled men released from U.S. prisons. I empirically characterize the increases in incarceration occurring since 1970 and assess the degree to which these changes result from changes in policy as opposed to changes in criminal behavior. I discuss what is known about the children of inmates and the likelihood that a child in the United States has an incarcerated parent. The chapter then addresses the employment barriers faced by former prison inmates with a particular emphasis on how employers view criminal history records in screening job applicants. Finally, I discuss a number of alternative models for aiding the reentry of former inmates. Transitional cash assistance, the use of reentry plans, traditional workforce development efforts, and transitional jobs for former inmates are all among the tools used across the United States. I review the existing evaluation literature on the effectiveness of these programmatic interventions.
This article will appear in Smeeding, Timothy, Irwin Garfinkel, and Ronald Mincy, eds. "Young Disadvantaged Men: Fathers, Families, Poverty, and Policy," The Annals of the American Academy of Political and Social Science 635 (May 2011).
Low high school graduation rates and sharply declining employment rates among disadvantaged youth have led to increasing numbers of youth who are disconnected from both school and work. What programs and policies might prevent these disconnections and improve educational and employment outcomes, particularly among young men? We review the evidence base on youth development policies for adolescents and young teens; programs seeking to improve educational attainment and employment for in-school youth; and programs that try to "reconnect" those who are out of school and frequently out of work, including public employment programs. We identify a number of programmatic strategies that are promising or even proven, based on rigorous evaluations, for disadvantaged youth with different circumstances, and conclude that policy efforts need to promote a range of approaches to engage and reconnect youth, along with ongoing evaluation efforts to improve our understanding of what works, including which program components, for whom.
This article will appear in Smeeding, Timothy, Irwin Garfinkel, and Ronald Mincy, eds. "Young Disadvantaged Men: Fathers, Families, Poverty, and Policy," The Annals of the American Academy of Political and Social Science 635 (May 2011).
Over time, public policy changes have strengthened the private child support system while reducing access to public support–welfare. Especially given the very limited availability of public support, nonresident fathers’ economic contributions through child support can play an important role in helping children avoid poverty. In this paper we review evidence on nonresident fathers’ ability to pay support, provide an overview of the way child support policies affect disadvantaged fathers, and propose new directions for child support policy. We argue that the current work-focused safety net, which aims to require and help enable disadvantaged mothers to work, creates a context in which government should similarly require and help enable all fathers, even those who are disadvantaged, to work and pay child support. However, reforms are needed to make this a realistic expectation, given many fathers’ limited employment options and complex families.
Full Text: DP 1372-10
Poverty is generally defined as income or expenditure insufficiency, but the economic condition of a household also depends on its real and financial asset holdings. This paper investigates measures of poverty that rely on indicators of household net worth. We review and assess two main approaches followed in the literature: income-net worth measures and asset-poverty. We provide fresh cross-national evidence based on data from the Luxembourg Wealth Study.