Those less fortunate
How Effective Is the Minimum Wage at Supporting the Poor?
Thomas MaCurdy, Journal of Political Economy, forthcoming
Abstract:
The efficacy of minimum wage policies as an antipoverty initiative depends on which families benefit from the increased earnings attributable to minimum wages and which families pay for these higher earnings. Proponents of these policies contend that employment impacts experienced by low-wage workers are negligible and, therefore, these workers do not pay. Instead proponents typically suggest that consumers pay for the higher labor costs through imperceptible increases in the prices of goods and services produced by low-wage labor. Adopting this "best-case" scenario from minimum-wage advocates, this study projects the consequences of the increase in the national minimum wage instituted in 1996 on the redistribution of resources among rich and poor families. Under this scenario, the minimum wage increase acts like a value-added or sales tax in its effect on consumer prices, a tax that is even more regressive than a typical state sales tax. With the proceeds of this national value-added tax collected to fund benefits, the 1996 increase in the minimum wage distributed the bulk of these benefits to one in four families nearly evenly across the income distribution. Far more poor families suffered reductions in resources than those who gained. As many rich families gained as poor families. These income transfer properties of the minimum wage document its considerable inefficiency as an antipoverty policy.
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Poverty and Aspirations Failure
Patricio Dalton, Sayantan Ghosal & Anandi Mani, Economic Journal, forthcoming
Abstract:
We develop a theoretical framework to study the psychology of poverty and 'aspirations failure', defined as the failure to aspire to one's own potential. In our framework, rich and the poor persons share the same preferences and same behavioural bias in setting aspirations. We show that poverty can exacerbate the effects of this behavioural bias leading to aspirations failure and hence, a behavioural poverty trap. Aspirations failure is a consequence of poverty, rather than a cause. We specify the conditions under which raising aspirations alone is sufficient to help escape from a poverty trap, even without relaxing material constraints.
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The Receipt of Subsidized Housing across Generations
Yana Kucheva, Population Research and Policy Review, December 2014, Pages 841-871
Abstract:
In this paper, I ask whether children who grow up in subsidized housing return to the program as adults. I use the Panel Study of Income Dynamics (PSID) and Inverse Probability of Treatment Weighting (IPTW) to compare children who grew up in subsidized housing to those who did not but lived in households eligible to receive the subsidy. I find that children who grew up in subsidized housing have small albeit statistically significant probabilities of returning to subsidized housing as adults.
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Critical Periods during Childhood and Adolescence
Gerard van den Berg et al., Journal of the European Economic Association, December 2014, Pages 1521-1557
Abstract:
We identify the ages that constitute sensitive (or critical) periods in children's development towards their adult health status, skills, and human capital. For this, we use data on families migrating into Sweden from countries that are poorer, with less healthy conditions. Late-life health is proxied by adult height and other adult outcomes. The relation between siblings' ages at migration and their adult outcomes allows us to estimate the causal effect of conditions at specific childhood ages. We effectively exploit that, for siblings, the migration occurs simultaneously in calendar time but at different developmental stages (ages). We find evidence that the period just before the puberty growth spurt constitutes a critical period for adult height and we find related critical periods for adult cognition, mental health, and education.
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Sharon Kukla-Acevedo & Colleen Heflin, Children and Youth Services Review, December 2014, Pages 246-252
Abstract:
Despite evidence linking parental unemployment spells and negative child outcomes, there is very little research that explores how participation in the Unemployment Insurance (UI) Program could buffer these effects. Using the National Longitudinal Survey of Youth 79 (NLSY79) and Children of the NLSY79 data, we estimate a series of fixed effects and instrumental variables models to estimate the relationship between UI participation and the Peabody Individual Achievement Test (math and reading comprehension). Once we control for the non-random selection process into UI participation, our results suggest a positive relationship between UI participation and PIAT math scores. None of the models suggests a negative influence of UI participation on child outcomes.
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Early Childhood WIC Participation, Cognitive Development and Academic Achievement
Margot Jackson, Social Science & Medicine, forthcoming
Abstract:
For the 22% of American children who live below the federal poverty line, and the additional 23% who live below twice that level, nutritional policy is part of the safety net against hunger and its negative effects on children's development. The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides steadily available food from the food groups essential for physical and cognitive development. The effects of WIC on dietary quality among participating women and children are strong and positive. Furthermore, there is a strong influence of nutrition on cognitive development and socioeconomic inequality. Yet, research on the non-health effects of U.S. child nutritional policy is scarce, despite the ultimate goal of health policies directed at children - to enable productive functioning across multiple social institutions over the life course. Using two nationally representative, longitudinal surveys of children - the Early Childhood Longitudinal Study, Birth Cohort (ECLS-B) and the Child Development Supplement (CDS) of the Panel Study of Income Dynamics - I examine how prenatal and early childhood exposure to WIC is associated in the short-term with cognitive development, and in the longer-term with reading and math learning. Results show that early WIC participation is associated with both cognitive and academic benefits. These findings suggest that WIC meaningfully contributes to children's educational prospects.
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The Prevalence and Economic Value of Doubling Up
Natasha Pilkauskas, Irwin Garfinkel & Sara McLanahan, Demography, October 2014, Pages 1667-1676
Abstract:
"Doubling up" (living with relatives or nonkin) is a common source of support for low-income families, yet no study to date has estimated its economic value relative to other types of public and private support. Using longitudinal data from the Fragile Families and Child Wellbeing Study, we examine the prevalence and economic value of doubling up among families with young children living in large American cities. We find that doubling up is a very important part of the private safety net in the first few years of a child's life, with nearly 50 % of mothers reporting at least one instance of doubling up by the time their child is 9 years old. The estimated rental savings from doubling up is significant and comparable in magnitude to other public and private transfers.
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Neighborhood Poverty and Allostatic Load in African American Youth
Gene Brody et al., Pediatrics, November 2014, Pages e1362-e1368
Objective: This study was designed to determine whether living in a neighborhood in which poverty levels increase across adolescence is associated with heightened levels of allostatic load (AL), a biological composite reflecting cardiometabolic risk. The researchers also sought to determine whether receipt of emotional support could ameliorate the effects of increases in neighborhood poverty on AL.
Methods: Neighborhood concentrations of poverty were obtained from the Census Bureau for 420 African American youth living in rural Georgia when they were 11 and 19 years of age. AL was measured at age 19 by using established protocols for children and adolescents. When youth were 18, caregivers reported parental emotional support and youth assessed receipt of peer and mentor emotional support. Covariates included family poverty status at ages 11 and 19, family financial stress, parental employment status, youth stress, and youths' unhealthful behaviors.
Results: Youth who lived in neighborhoods in which poverty levels increased from ages 11 to 19 evinced the highest levels of AL even after accounting for the individual-level covariates. The association of increasing neighborhood poverty across adolescence with AL was not significant for youth who received high emotional support.
Conclusions: This study is the first to show an association between AL and residence in a neighborhood that increases in poverty. It also highlights the benefits of supportive relationships in ameliorating this association.
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The Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns
Tatyana Deryugina, Laura Kawano & Steven Levitt, NBER Working Paper, November 2014
Abstract:
Hurricane Katrina destroyed more than 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane's long-term economic impact on its victims. Katrina had large and persistent impacts on where people live; small and mostly transitory impacts on wage income, employment, total income, and marriage; and no impact on divorce or fertility. Within just a few years, Katrina victims' incomes fully recover and even surpass that of controls from similar cities that were unaffected by the storm. The strong economic performance of Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning. Our results suggest that, at least in this particular disaster, aid to cover destroyed assets and short-run income declines was sufficient to make victims financially whole. Our results provide some optimism regarding the costs of climate-change driven dislocation, especially when adverse events can be anticipated well in advance.
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Timothy Beatty & Charlotte Tuttle, American Journal of Agricultural Economics, forthcoming
Abstract:
Economic theory predicts that households who receive less in Supplemental Nutrition Assistance Program benefits than they spend on food will treat SNAP benefits as if they were cash. However, empirical tests of these predictions draw different conclusions. In this study, we reexamine this question using recent increases in Supplemental Nutrition Assistance Program benefits, the largest of which was due to the American Recovery and Reinvestment Act of 2009. We find that increases in benefits cause households to increase their food budget share by more than would be predicted by theory. Results are robust to a host of specification tests.
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Financial strain, inflammatory factors, and haemoglobin A1c levels in African American women
Carolyn Cutrona et al., British Journal of Health Psychology, forthcoming
Objective: Type 2 diabetes disproportionately affects African American women, a population exposed to high levels of stress, including financial strain (Centers for Disease Control & Prevention, 2011, http://www.cdc.gov/diabetes/pubs/pdf/ndfs_2011.pdf). We tested a mediational model in which chronic financial strain among African American women contributes to elevated serum inflammation markers, which, in turn, lead to increased haemoglobin A1C (HbA1c) levels and risk for type 2 diabetes.
Methods: We assessed level of financial strain four times over a 10-year period and tested its effect on two serum inflammation markers, C-reactive protein (CRP) and soluble interleukin-6 receptor (sIL-6R) in year 11 of the study. We tested the inflammation markers as mediators in the association between chronic financial strain and HbA1c, an index of average blood glucose level over several months.
Design: Data were from 312 non-diabetic African American women from the Family and Community Health Study (FACHS; Cutrona et al., 2000, J. Pers. Soc. Psychol., 79, 1088).
Results: Chronic financial strain predicted circulating sIL-6R after controlling for age, BMI, health behaviours, and physical health measures. In turn, sIL-6R significantly predicted HbA1c levels. The path between chronic financial strain and HbA1c was significantly mediated by sIL-6R. Contrary to prediction, CRP was not predicted by chronic financial strain.
Conclusions: Results support the role of inflammatory factors in mediating the effects of psychosocial stressors on risk for type 2 diabetes. Findings have implications for interventions that boost economic security and foster effective coping as well as medical interventions that reduce serum inflammation to prevent the onset of type 2 diabetes.
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Role of health in predicting moves to poor neighborhoods among Hurricane Katrina survivors
Mariana Arcaya et al., Proceedings of the National Academy of Sciences, 18 November 2014, Pages 16246-16253
Abstract:
In contrast to a large literature investigating neighborhood effects on health, few studies have examined health as a determinant of neighborhood attainment. However, the sorting of individuals into neighborhoods by health status is a substantively important process for multiple policy sectors. We use prospectively collected data on 569 poor, predominantly African American Hurricane Katrina survivors to examine the extent to which health problems predicted subsequent neighborhood poverty. Our outcome of interest was participants' 2009-2010 census tract poverty rate. Participants were coded as having a health problem at baseline (2003-2004) if they self-reported a diagnosis of asthma, high blood pressure, diabetes, high cholesterol, heart problems, or any other physical health problems not listed, or complained of back pain, migraines, or digestive problems at baseline. Although health problems were not associated with neighborhood poverty at baseline, those with baseline health problems ended up living in higher poverty areas by 2009-2010. Differences persisted after adjustment for personal characteristics, baseline neighborhood poverty, hurricane exposure, and residence in the New Orleans metropolitan area, with baseline health problems predicting a 3.4 percentage point higher neighborhood poverty rate (95% confidence interval: 1.41, 5.47). Results suggest that better health was protective against later neighborhood deprivation in a highly mobile, socially vulnerable population. Researchers should consider reciprocal associations between health and neighborhoods when estimating and interpreting neighborhood effects on health. Understanding whether and how poor health impedes poverty deconcentration efforts may help inform programs and policies designed to help low-income families move to - and stay in - higher opportunity neighborhoods.
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Margaret Elliott et al., Journal of Research on Adolescence, forthcoming
Abstract:
Adolescents from low-income families face various opportunities and constraints as they develop, with possible ramifications for their well-being. Two contexts of particular importance are the home and the neighborhood. Using adolescent data from the first two waves of the Three-City Study (N = 1,169), this study explored associations among housing problems and neighborhood disorder with adolescents' socioemotional problems, and how these associations varied by parental monitoring and gender. Results of hierarchical linear models suggest that poor-quality housing was most predictive of the functioning of girls and of adolescents with restrictive curfews, whereas neighborhood disorder was a stronger predictor for boys. Implications for future research on associations between housing and neighborhood contexts and adolescent development are discussed.