Huddled masses
What Happens When You Give Money to Panhandlers? The Case of Downtown Manhattan
Gwendolyn Dordick et al.
Journal of Urban Economics, November 2018, Pages 107-123
Abstract:
We study panhandling in Downtown Manhattan. Surprisingly few people panhandle there at any given moment: about 8-10 people on average at a busy time, in a small area with an economy the size of Latvia's. The redevelopment of Ground Zero and the resulting surge in economic activity - including the opening of North America's tallest building - changed where panhandlers operated within the neighborhood, but did not significantly increase panhandling overall. The response was muted because the labor supply of panhandlers appears to be inelastic. On the other hand, good places to panhandle are relatively abundant. Hence the benefits of the boom in economic activity accrued mainly to incumbent panhandlers themselves; as would the benefits of greater donor generosity.
The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility
Raj Chetty et al.
NBER Working Paper, October 2018
Abstract:
We construct a publicly available atlas of children's outcomes in adulthood by Census tract using anonymized longitudinal data covering nearly the entire U.S. population. For each tract, we estimate children's earnings distributions, incarceration rates, and other outcomes in adulthood by parental income, race, and gender. These estimates allow us to trace the roots of outcomes such as poverty and incarceration back to the neighborhoods in which children grew up. We find that children's outcomes vary sharply across nearby areas: for children of parents at the 25th percentile of the income distribution, the standard deviation of mean household income at age 35 is $5,000 across tracts within counties. We illustrate how these tract-level data can provide insight into how neighborhoods shape the development of human capital and support local economic policy using two applications. First, the estimates permit precise targeting of policies to improve economic opportunity by uncovering specific neighborhoods where certain subgroups of children grow up to have poor outcomes. Neighborhoods matter at a very granular level: conditional on characteristics such as poverty rates in a child's own Census tract, characteristics of tracts that are one mile away have little predictive power for a child's outcomes. Our historical estimates are informative predictors of outcomes even for children growing up today because neighborhood conditions are relatively stable over time. Second, we show that the observational estimates are highly predictive of neighborhoods' causal effects, based on a comparison to data from the Moving to Opportunity experiment and a quasi-experimental research design analyzing movers' outcomes. We then identify high-opportunity neighborhoods that are affordable to low- income families, providing an input into the design of affordable housing policies. Our measures of children's long-term outcomes are only weakly correlated with traditional proxies for local economic success such as rates of job growth, showing that the conditions that create greater upward mobility are not necessarily the same as those that lead to productive labor markets.
Minimum Wages and the Distribution of Family Incomes
Arindrajit Dube
NBER Working Paper, November 2018
Abstract:
There is robust evidence that higher minimum wages increase family incomes at the bottom of the distribution. The long run (3 or more years) minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between -0.220 and -0.459 across alternative specifications. The long run minimum wage elasticities for the 10th and 15th unconditional quantiles of family income range between 0.152 and 0.430 depending on specification. A reduction in public assistance partly offsets these income gains, which are on average 66% as large when using an expanded income definition including tax credits and non-cash transfers.
Longer-Run Effects of Anti-Poverty Policies on Disadvantaged Neighborhoods
David Neumark, Brian Asquith & Brittany Bass
NBER Working Paper, November 2018
Abstract:
We estimate the longer-run effects of minimum wages, the Earned Income Tax Credit, and welfare on key economic indicators of economic self-sufficiency in disadvantaged neighborhoods. Our strongest findings are twofold. First, the longer-run effects of the EITC are to increase employment and to reduce poverty and public assistance, as long as we rely on national as well as state variation in EITC policy. Second, tighter welfare time limits also reduce poverty and public assistance in the longer run; while the effect on public assistance result may be mechanically related to loss of benefits, the effect on poverty is more likely behavioral. It is harder to draw firm conclusions about minimum wages and welfare benefits. With some specifications and samples, the evidence suggests that higher minimum wages lead to longer-run declines in poverty and the share of families on public assistance, whereas higher welfare benefits have adverse longer-run effects. However, the evidence on minimum wages and welfare benefits is not robust - and the estimated effects of minimum wages are sometimes in the opposite direction, including when we restrict the analysis to more recent data that is likely of more interest to policymakers.
Do Neighborhoods Affect Credit Market Decisions of Low-Income Borrowers? Evidence from the Moving to Opportunity Experiment
Sarah Miller & Cindy Soo
NBER Working Paper, September 2018
Abstract:
This paper provides new evidence on the role of neighborhood in the financial decisions and outcomes of low-income borrowers. We link participants in the Moving to Opportunity experiment to credit reports and "alternative" credit bureau data that tracks payday loan usage. We find that participants who were randomly selected to receive a voucher experienced better access to credit in adulthood; we also find evidence that, among some subgroups, moving to a lower poverty neighborhood reduced payday loan usage and delinquency behavior. We explore the mechanisms underlying our results by investigating the credit market behavior of peers, the presence of banks and payday loan stores, and approval rates in the neighborhoods in which MTO participants live as adults. Our analysis suggests that the presence of payday loan stores and peer behavior play an important role in the observed improvements in credit market outcomes.
Examining the Externality of Unemployment Insurance on Children's Educational Achievement
Krishna Regmi
Economic Inquiry, forthcoming
Abstract:
I exploit differences in the generosity of unemployment insurance (UI) benefits across states and over time to investigate the link between UI and children's academic achievement. Estimates show that a 1% increase in maximum weekly UI benefits reduces the probability that a child repeats a grade by around 0.03 percentage points. The effect is concentrated among children of low‐ and middle‐income families. This paper's findings, which are the first in the literature to show evidence of a positive effect of UI on children's educational outcomes, provide insight into the role of UI in the human capital accumulation of children.
Neighbors and Networks: The Role of Social Interactions on the Residential Choices of Housing Choice Voucher Holders
Ingrid Gould Ellen, Michael Suher & Gerard Torrats-Espinosa
Journal of Housing Economics, March 2019, Pages 56-71
Abstract:
The housing choice voucher program aims to reduce housing cost burdens as well as to enable recipients to move to a broader diversity of neighborhoods. Prior evidence shows voucher recipients still end up in neighborhoods with relatively high poverty rates and low performing schools. These constrained neighborhood choices can in part be attributed to landlord discrimination and the geographic concentration of units that rent below voucher caps. In this paper, we consider an additional explanation: the role of information and social influence in determining the effective set of potential housing choices. Using a strategy based on proximity of households in origin census tracts, we find evidence consistent with social influence effects being present in the neighborhood choices of voucher holders. Pairs of households living within the same or adjacent buildings are significantly more likely to relocate to the same neighborhood as each other than are more distant households within the same origin neighborhood. Further, we show that voucher holders who move to the same neighborhood as a nearby voucher holder end up on average in neighborhoods that have higher poverty rates, lower levels of labor market engagement, and higher exposure to environmental hazards - in both absolute terms and relative to other voucher holders from their same origin tract.
The Macroeconomic Consequences of Early Childhood Development Policies
Diego Daruich
NYU Working Paper, October 2018
Abstract:
To study long-run large-scale early childhood policies, this paper incorporates early childhood investments into a standard general-equilibrium (GE) heterogeneous-agent overlapping-generations model. After estimating it using US data, we show that an RCT evaluation of a short-run small-scale early childhood program in the model predicts effects on children's education and income that are similar to the empirical evidence. A long-run large-scale program, however, yields twice as large welfare gains, even after considering GE and taxation effects. Key to this difference is that investing in a child not only improves her skills but also creates a better parent for the next generation.
Give Credit Where?: The Incidence of Child Care Tax Credits
Luke Rodgers
Journal of Urban Economics, November 2018, Pages 51-71
Abstract:
The cost of child care can affect a family’s employment, location, and commuting decisions. Child care tax credits are intended to relieve the financial burden of child care for working families, yet the benefit incidence may fall on child care providers if they increase prices in response to credit generosity. Using policy-induced variation in the Child and Dependent Care Credit, this paper presents evidence of substantial pass-through: over half of every dollar is passed through to providers in the form of higher prices and wages. Increased non-refundable credit generosity may have the unintended effect of making child care less affordable for low-income families, a result with distributional and spatial implications due to income sorting of families within an urban area.
Who Wants Affordable Housing in their Backyard? An Equilibrium Analysis of Low Income Property Development
Rebecca Diamond & Tim McQuade
Journal of Political Economy, forthcoming
Abstract:
We nonparametrically estimate spillovers of properties financed by the Low Income Housing Tax Credit (LIHTC) onto neighborhood residents by developing a new difference-in-differences style estimator. LIHTC development revitalizes low-income neighborhoods, increasing house prices 6.5%, lowering crime rates, and attracting racially and income diverse populations. LIHTC development in higher income areas causes house price declines of 2.5% and attracts lower income households. Linking these price effects to a hedonic model of preferences, LIHTC developments in low-income areas cause aggregate welfare benefits of $116 million. Affordable housing development acts like a place-based policy and can revitalize low-income communities.
Heterogeneous impacts of the Supplemental Nutrition Assistance Program on food insecurity
Partha Deb & Christian Gregory
Economics Letters, December 2018, Pages 55-60
Abstract:
We study the effects of SNAP participation on food insecurity allowing for a priori unspecified heterogeneous treatment effects. Using finite mixture models, we identify a low food security class comprising almost 60% of the samples for whom SNAP participation increases the probability of no food insecurity by 14-37 percentage points across specifications and decreases the probability of very high insecurity by 14-35 percentage points. We find that SNAP participation has a small and statistically insignificant effect on food insecurity for the remaining 40% of the population. By examining posterior probabilities of class membership, we discover that individuals in the latter class are less likely to report unmet food needs and live in larger households where more consumption smoothing may be possible.
Safety net? The use of vouchers when a place-based rental subsidy ends
Vincent Reina & Ben Winter
Urban Studies, forthcoming
Abstract:
The US government moved to a private ownership model for providing affordable housing in the 1960s, which resulted in millions of housing units being developed and governed by affordability restrictions that expire at some later point. By 2010, thousands of tenants lived in properties where a private owner, or US Department of Housing and Urban Development, terminated the rental subsidy, and many more will face this reality going forward. Households in the project-based Section 8 programme are offered a voucher when the subsidy contract ends. This as of right voucher represents the only federal rental safety net programme in the USA. Despite this reality, little is known about what happens to tenants when a subsidy contract ends, including whether or how they use their vouchers. This paper creates a national census of every tenant who lived in a property in the USA where the project-based Section 8 subsidy ended through 2010 to analyse this event. The analysis includes a series of models that analyse what factors are associated with voucher use, moves, and opportunity moves. This paper finds that the voucher is not used by the majority of households, despite high levels of household demand for the subsidy. Those who use the voucher and move tend to move to lower poverty tracts. However, the subsidy offers the weakest safety net for households where the head is older than 62 or Black.
The EITC and Self-Employment Among Married Mothers
Katherine Lim & Katherine Michelmore
Labour Economics, December 2018, Pages 98-115
Abstract:
This paper analyzes the impact of the earned income tax credit (EITC) on low-income, non-college educated married mothers’ self-employment behavior. We use a parameterized difference-in-differences approach that captures policy changes at the federal and state level over the last two decades to analyze how the increasing generosity of the EITC has affected married women's self-employment. Results suggest that the average increase in state EITC benefits during that time period increased self-employment behavior of low-income, non-college educated married mothers by 0.9 percentage points. Our measure of self-employment reflects hours spent in self-employment, which we interpret as a real increase in self-employment effort rather than a change in reporting. The findings provide evidence that the EITC can influence workers’ type of employment in addition to their overall labor supply.