Sparingly
Disability Insurance Income Saves Lives
Alexander Gelber et al.
Journal of Political Economy, forthcoming
Abstract:
We show that higher payments from US Social Security Disability Insurance (DI) reduce mortality. Using administrative data on new DI beneficiaries, we exploit discontinuities in the benefit formula through a regression kink design. We estimate that $1,000 more in annual DI payments decreases the annual mortality rate of lower-income beneficiaries by approximately 0.18 to 0.35 percentage points, implying an elasticity of mortality with respect to DI income of around -0.6 to -1.0. We find no robust evidence of an effect of DI income on the mortality of higher-income beneficiaries.
Minimum Wages and Poverty: New Evidence from Dynamic Difference-in-Differences Estimates
Richard Burkhauser, Drew McNichols & Joseph Sabia
NBER Working Paper, April 2023
Abstract:
Advocates of minimum wage increases have long touted their potential to reduce poverty. This study assesses this claim. Using data spanning nearly four decades from the March Current Population Survey, and a dynamic difference-in-differences approach, we find that a 10 percent increase in the minimum wage is associated with a (statistically insignificant) 0.17 percent increase in the probability of longer-run poverty among all persons. With 95% confidence, we can rule out long-run poverty elasticities with respect to the minimum wage of less than -0.129, which includes central poverty elasticities reported by Dube (2019). Prior evidence suggesting large poverty-reducing effects of the minimum wage are (i) highly sensitive to researcher's choice of macroeconomic controls, and (ii) driven by specifications that limit counterfactuals to geographically proximate states ("close controls"), which poorly match treatment states' pre-treatment poverty trends. Moreover, an examination of the post-Great Recession era -- which saw frequent, large increases in state minimum wages -- failed to uncover poverty-reducing effects of the minimum wage across a wide set of specifications. Finally, we find that less than 10 percent of workers who would be affected by a newly proposed $15 federal minimum wage live in poor families.
Where Do They Go? The Destinations of Residents Moving from Gentrifying Neighborhoods
Lance Freeman et al.
Urban Affairs Review, forthcoming
Abstract:
The fate of residents living in gentrifying neighborhoods remains an important yet little understood outcome of the gentrification process. In this study, we assess the effects of gentrification on mobility patterns using the geocoded version of the panel study of income dynamics (PSID), a nationally representative longitudinal survey of households. While many studies examine whether residents move from gentrifying neighborhoods, few study their destinations. We utilize PSID data from 2001 to 2017 to identify each respondent's census tract and characteristics of the tract to which they moved. We find little difference in the socioeconomic status or access to the urban core of the destination neighborhoods of residents originating in gentrifying neighborhoods compared to the destination neighborhoods of residents originating in nongentrifying neighborhoods. Our findings inform debates on whether residents of gentrifying neighborhoods are pushed out of central cities and into worse neighborhoods than residents of other low-income neighborhoods.
The physical and mental health returns of Head Start 25 years after participation: Evidence from income eligibility cutoffs
Lindsey Lacey
Economic Inquiry, forthcoming
Abstract:
Most studies that look at long-term effects of Head Start, the largest early childhood intervention in the US, exploit its rollout in the 1960s, missing the effects of many changes to the program in the 1980s and 1990s. I study the effects of Head Start on long-term physical and mental health for children who attend Head Start in the 1980s-1990s and are new labor market entrants. I find large improvements in health, resulting in a 0.15 standard deviation decrease in the incidence of poor health. Ultimately, Head Start improves health outcomes up to 25 years after participation in the program.
The Short-Term Labor Supply Response to the Expanded Child Tax Credit
Brandon Enriquez, Damon Jones & Ernest Tedeschi
NBER Working Paper, April 2023
Abstract:
We estimate the extensive and intensive margin labor supply response to the monthly Child Tax Credit disbursed in 2021 as a part of the American Rescue Plan Act. Using Current Population Survey microdata, we compare labor supply outcomes among households who qualify for varying relative increases in household income, as a result of their income level and household size. We do not find strong evidence of a change in labor supply for families receiving the credit. The results are robust to alternative labor supply models, where households respond mainly to cash on hand or changes in the annual budget set.
How buses alleviate unemployment and poverty: Lessons from a natural experiment in Clayton County, GA
Fei Li & Christopher Kajetan Wyczalkowski
Urban Studies, forthcoming
Abstract:
Many studies have documented the linkage between public transportation and economic outcomes, though there is relatively little empirical evidence on the consequences of losing existing transit services, especially bus services, which disproportionately serve low-income populations. We investigate the impacts of bus access on poverty and employment using a natural experiment in Clayton County, GA, where the local bus transit was terminated between 2010 and 2015. Using a difference-in-difference approach, we find substantial increases in poverty and unemployment rates in affected neighbourhoods during the five-year period. Our findings suggest both the spatial mismatch hypothesis, which predicts the reduction in transit access can lead to reductions in job accessibility and employment, and the residential sorting hypothesis, which states that poor households gravitate towards neighbourhoods with better transit access, could be at play. Overall, we find strong evidence that disruptions in bus transit could have significant adverse impacts on neighbourhood economic outcomes. Our findings underscore the need for federal and local public transportation funding to help improve job access, alleviate poverty, and maintain neighbourhood stability.
Gentrification and retail churn: Theory and evidence
Edward Glaeser, Michael Luca & Erica Moszkowski
Regional Science and Urban Economics, forthcoming
Abstract:
How does gentrification transform neighborhood retail amenities? This paper presents a model in which gentrification harms incumbent residents by increasing rental costs and by eliminating distinctive local stores. While rising rents can be offset with targeted transfers, the destruction of neighborhood character can -- in principle -- reduce overall social surplus. Empirically we find that gentrifying neighborhoods experience faster growth in both the number of retail establishments and business closure rates than their non-gentrifying counterparts. However, we see little evidence that gentrification is associated with changes in retail mix or prices -- suggesting limited welfare losses.
When Paying Is (Even More) Painful: Personality-Based Heterogeneity in Consumption Responses to Economic Hardship
Joe Gladstone & Theodore Masters-Waage
Social Psychological and Personality Science, forthcoming
Abstract:
Economic downturns lead to declining consumer spending, but people vary considerably in their consumption responses. We investigate an important driver of this heterogeneity, personality. Trait level variation has been observed in the levels of psychological discomfort when making a purchase ("the pain of paying"). We test whether individuals who experience more pain when paying are not only reluctant spenders in general but also decrease spending more sharply when experiencing economic hardship, indicating an increased "pain sensitivity." Evidence from a two-wave online survey (N = 942), a representative longitudinal database (N = 3,181) and a cross-national survey (N=11,972) converge to support the hypothesis that the pain of paying moderates the relationship between economic hardship and spending. Our findings provide evidence that personality can shape people's responses to economic downturns and indicate the potential role of psychology-based interventions in macro-economic policy.