Cashing Checks
Welfare versus Work under a Negative Income Tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments
Chris Riddell & Craig Riddell
Journal of Labor Economics, forthcoming
Abstract:
The Income Maintenance Experiments have received renewed attention due to growing international interest in a Basic Income. Proponents of a Negative Income Tax viewed it as a replacement for traditional welfare with stronger work incentives. However, existing labor supply estimates for single mothers (those eligible for welfare) are uniformly negative. We re-assess the experimental evidence and find randomization failure in two NITs (Gary and Seattle). In Denver and Manitoba, we find positive labor supply responses for those on welfare prior to random assignment. Our results provide strong evidence that a NIT can increase work activity among single mothers on welfare.
Mitigating welfare-related prejudice and partisanship among U.S. conservatives with moral reframing of a universal basic income policy
Catherine Thomas et al.
Journal of Experimental Social Psychology, forthcoming
Abstract:
Inequality and deep poverty have risen sharply in the US since the 1990s. Simultaneously, cash-based welfare policies have frayed, support for public assistance has fallen on the political right, and prejudice against recipients of welfare has remained high. Yet, in recent years Universal Basic Income (UBI) has gained traction, a policy proposing to give all citizens cash sufficient to meet basic needs with no strings attached. We hypothesized that UBI can mitigate the partisanship and prejudice that define the existing welfare paradigm in the US but that this potential depends critically on the narratives attached to it. Indeed, across three online experiments with US adults (total N = 1888), we found that communicating the novel policy features of UBI alone were not sufficient to achieve bipartisan support for UBI or overcome negative stereotyping of its recipients. However, when UBI was described as advancing the more conservative value of financial freedom, conservatives perceived the policy to be more aligned with their values and were less opposed to the policy (meta-analytic effect on policy support: d = 0.36 [95% CI: 0.27 to 0.46]). Extending the literatures on moral reframing and cultural match, we further find that this values-aligned policy narrative mitigated prejudice among conservatives, reducing negative welfare-related stereotyping of policy recipients (meta-analytic effect d = −0.27 [95% CI: −0.38 to −0.16]), while increasing affiliation with them. Together, these findings point to moral reframing as a promising means by which institutional narratives can be used to bridge partisan divides and reduce prejudice.
Associations Between State TANF Policies, Child Protective Services Involvement, And Foster Care Placement
Donna Ginther & Michelle Johnson-Motoyama
Health Affairs, December 2022, Pages 1744-1753
Abstract:
The Temporary Assistance for Needy Families (TANF) program, which was established in 1996 and renewed in 2005, constituted a major reform of the US welfare system. Since its renewal, few studies have examined its effects on children. We used instrumental variables, two-way fixed effects, and event studies to examine the associations between state-level TANF policies, Child Protective Services involvement, and foster care placement during the period 2004–16. We found that each additional TANF policy that restricted access to benefits was associated with a 13 percent reduction in TANF caseloads. Using TANF policies as an instrument, we found that increases in TANF caseloads were associated with significant reductions in numbers of neglect victims and foster care placements. In two-way fixed effects models, restrictions on TANF access were associated with more than forty-four additional neglect victims per 100,000 child population and between nineteen and twenty-two additional children per 100,000 placed in foster care. Our findings suggest that additional research using data that capture the nuances of maltreatment should be used to investigate the relationships among TANF policies, child maltreatment, and foster care placement.
Housing discrimination in the low-income context: Evidence from a correspondence experiment
Eric Chan & Yulian Fan
Journal of Housing Economics, forthcoming
Abstract:
This paper uses a correspondence experiment across the northeastern corridor of the US to examine landlord responses to prospective tenants inquiries through a low-income housing rental web site. We find multiple forms of discrimination against African-American tenants, including less responses, responses with less greeting and polite words being used, and levels of discrimination that progressively increases along measures of school quality and neighborhood characteristics. In contrast, we find substantially less evidence of discrimination against voucher holders. Voucher holders do not see lower rates of response, though responses arrive later on average and they face lower rates of responses in neighborhoods with very high quality schools. The results demonstrate that racial discrimination is substantial even in a context where landlords advertise to low-income families, though discrimination against voucher holders may be attenuated.
Keeping Up with the Blackstones: Institutional Investors and Gentrification
Neroli Austin
University of Oxford Working Paper, November 2022
Abstract:
Policy makers worry that institutional investment in residential real estate drives up house prices and crowds out minority residents. Using mergers of private-equity backed firms to isolate quasi-exogenous variation in concentration of ownership at the neighborhood level, I find that shocks to institutional ownership indeed cause higher prices and rents — but, contrary to popular opinion — increase rather than decrease neighborhood diversity. The reason for increased diversity is that some minorities benefit from the relaxation of borrowing constraints as a result of higher house prices and take out mortgages for home improvement, increasing the attractiveness of their homes; other minorities move in because more rental properties become available as institutional ownership crowds out predominantly white individual home ownership. Institutional investors benefit from increased market values of their houses in increasingly attractive neighborhoods, but also extract value by challenging tax assessors’ valuations and thus reduce their tax bill by an estimated $4.1b nationwide. This is a hitherto unknown source of rent extraction by institutional investors. I conclude that policy makers are right to be worried about some aspects of institutional investment in residential real estate, but they are mostly worried about the wrong thing.
Effects Of The 2021 Expanded Child Tax Credit On Adults’ Mental Health: A Quasi-Experimental Study
Akansha Batra, Kaitlyn Jackson & Rita Hamad
Health Affairs, January 2023, Pages 74-82
Abstract:
The US Congress temporarily expanded the Child Tax Credit (CTC) during the COVID-19 pandemic to provide economic assistance for families with children. Although formerly the CTC provided $2,000 per child for mostly middle-income parents, during July–December 2021 it provided up to $3,600 per child. Eligibility criteria were also expanded to reach more economically disadvantaged families. There has been little research evaluating the effect of the policy expansion on mental health. Using data from the Census Bureau’s Household Pulse Survey and a quasi-experimental study design, we examined the effects of the expanded CTC on mental health and related outcomes among low-income adults with children, and by racial and ethnic subgroup. We found fewer depressive and anxiety symptoms among low-income adults. Adults of Black, Hispanic, and other racial and ethnic backgrounds demonstrated greater reductions in anxiety symptoms compared to non-Hispanic White adults with children. There were no changes in mental health care use. These findings are important for Congress and state legislators to weigh as they consider making the expanded CTC and other similar tax credits permanent to support economically disadvantaged families.
Urban Renewal and Inequality: Evidence from Chicago's Public Housing Demolitions
Milena Almagro, Eric Chyn & Bryan Stuart
NBER Working Paper, January 2023
Abstract:
This paper studies one of the largest spatially targeted redevelopment efforts implemented in the United States: public housing demolitions sponsored by the HOPE VI program. Focusing on Chicago, we study welfare and racial disparities in the impacts of demolitions using a structural model that features a rich set of equilibrium responses. Our results indicate that demolitions had notably heterogeneous effects where welfare decreased for low-income minority households and increased for White households. Counterfactual simulations explore how housing policy mitigates negative effects of demolitions and suggest that increased public housing site redevelopment is the most effective policy for reducing racial inequality.
It’s (a) Shame: Why Poverty Leads to Support for Authoritarianism
Jasper Neerdaels, Christian Tröster & Niels Van Quaquebeke
Personality and Social Psychology Bulletin, forthcoming
Abstract:
The literature has widely discussed and supported the relationship between poverty and support for authoritarian leaders and regimes. However, there are different claims about the mediating mechanism and a lack of empirical tests. We hypothesize that the effect of poverty on support for authoritarianism is mediated by shame: People living in poverty frequently experience social exclusion and devaluation, which is reflected in feelings of shame. Such shame, in turn, is likely to increase support for authoritarianism, mainly due to the promise of social re-inclusion. We support our hypothesis in two controlled experiments and a large-scale field study while empirically ruling out the two main alternative explanations offered in the literature: stress and anxiety. Finally, we discuss how the present findings can support policymakers in efficiently addressing the negative political consequences of poverty.
Nudging or Nagging? Conflicting Effects of Behavioral Tools
Ariel Kalil et al.
University of Chicago Working Paper, January 2023
Abstract:
The gap in reading skills between low-income children and their higher income peers emerges early in life. To help boost the reading skills of low-income children, we conducted an RCT with low-income parents of young children in Chicago. The RCT aimed to increase parental reading time and child’s literacy skills. Parents were randomized into 4 groups: 1) a control group, and groups that received 2) a digital library tablet, 3) a digital library tablet with reminder texts, and 4) a digital library tablet with goal-setting texts. Both reminders and goal setting text messages were designed to nudge parents to manage present bias. Relative to the digital library tablet treatment, we find that goal-setting messages led to an increase (.32 SD) in parent reading time but had no effect on literacy skills. Unexpectedly, reminder messages led to a decrease in literacy skills, despite no significant difference in reading time. This demonstrates that nudging might have the unintended consequence of reducing the quality of the task (reading). Another important result is that technology may help boost the reading skills of low-income children: children in the digital library tablet group increase their literacy skills by .29 SD relative to the control group. All results are robust to controlling for school fixed effects, age and in the case of literacy skills, baseline assessment scores.
Evictions and Psychiatric Treatment
Ashley Bradford & Johanna Catherine Maclean
NBER Working Paper, December 2022
Abstract:
Stable housing is critical for health, employment, education, and other social outcomes. Evictions reflect a form of housing instability that is experienced by millions of Americans each year. Inadequately treated psychiatric disorders have the potential to influence evictions in several ways. For example, these disorders may impede labor market performance and thus the ability to pay rent, or increase the likelihood of risky and/or nuisance behaviors that can lead to a lease violation. We estimate the effect of local access to psychiatric treatment on eviction rates. We combine data on the number of psychiatric treatment centers that offer outpatient and residential care within a county with eviction rates in a two-way fixed-effects framework. Our findings imply that ten additional psychiatric treatment centers in a county lead to a reduction of 2.1% in the eviction rate.