Working Poor
The Consumption, Income, and Well-Being of Single Mother Headed Families 25 Years After Welfare Reform
Jeehoon Han, Bruce Meyer & James Sullivan
NBER Working Paper, August 2021
Abstract:
We investigate how material well-being has changed over time for single mother headed families -- the primary group affected by welfare reform and other policy changes of the 1990s. We focus on consumption as well as other indicators including components of consumption, measures of housing quality, and health insurance coverage. The results provide strong evidence that the material circumstances of single mothers improved in the decades following welfare reform. The consumption of the most disadvantaged single mother headed families -- those with low consumption or low education -- rose noticeably over time and at a faster rate than for those in comparison groups.
How Did Safety-Net Reform Affect the Education of Adolescents from Low-Income Families?
Jacob Bastian, Luorao Bian & Jeffrey Grogger
Labour Economics, forthcoming
Abstract:
Roughly 25 years ago, the US safety net was substantially reformed. Here we ask how those reforms affected the educational attainment of youths who were teens at the time those reforms took place. We take a difference-in-difference approach, following adolescents from two generations roughly 20 years apart. In each generation, we compare two groups, one which was more likely to have been affected by safety-net reform, and one which was less likely to have been affected. Under some assumptions, our approach identifies the joint, or bundled, effects of the constituent policy changes that make up safety-net reform. We find evidence that safety-net reform may have reduced educational attainment for women, and had small positive effects on education for men. We offer suggestions as to why our findings differ from those of previous studies of the components of safety net reform.
Poverty-related bandwidth constraints reduce the value of consumption
Heather Schofield & Atheendar Venkataramani
Proceedings of the National Academy of Sciences, 31 August 2021
Abstract:
Poverty confers many costs on individuals, primarily through direct material deprivation. We hypothesize that these costs may be understated: poverty may also reduce human welfare by decreasing the experiential value of what little the poor are able to consume via reduced bandwidth (cognitive resources) -- exerting a de facto "tax" on the value of consumption. We test this hypothesis using a randomized controlled trial in which we experimentally simulate key aspects of poverty that impair bandwidth via methods commonly used in laboratory studies (e.g., memorizing sequences) and via introducing stressors commonly associated with life in poverty (e.g., thinking about financial security and experiencing thirst). Participants then engaged in consumption activities and were asked to rate their enjoyment of these activities. Consistent with our hypothesis, the randomly assigned treatments designed to reduce bandwidth significantly and meaningfully reduced ratings of the consumption activities, with the strongest effects on the consumption of food. Our results shed additional light on how the consequences of poverty on human welfare may compound and motivate future work on the full scope of returns to poverty alleviation efforts.
Effects of Welfare Reform on Household Food Insecurity Across Generations
Hope Corman et al.
NBER Working Paper, July 2021
Abstract:
This study estimated the effects of welfare reform in the 1990s, which permanently restructured and contracted the cash assistance system in the U.S., on food insecurity -- a fundamental form of hardship -- of the next generation of households. An implicit goal underlying welfare reform was the disruption of an assumed intergenerational transmission of disadvantage; however, little is known about the effects of welfare reform on the well-being of the next generation. Using intergenerational data from the Panel Study of Income Dynamics and a variation on a difference-in-differences framework, this study exploits 3 sources of variation in childhood exposure to welfare reform: (1) risk of exposure across birth cohorts; (2) variation of exposure within cohorts because different states implemented welfare reform in different years; and (3) variation between individuals with the same exposure who were more likely and less likely to rely on welfare. We found that exposure to welfare reform led to decreases in food insecurity of the next generation of households, by about 10% for a 5-year increase in exposure, with stronger effects for women, individuals exposed for longer durations during childhood, individuals exposed in early childhood (0-5 years), and individuals whose mothers had a high school education (versus less).
Investing in Gentrification: The Eligibility of Gentrifying Neighborhoods for Federal Place-Based Economic Investment in U.S. Cities
Noli Brazil & Amanda Portier
Urban Affairs Review, forthcoming
Abstract:
Place-based policies commonly target disadvantaged neighborhoods for economic improvement, typically in the form of job opportunities, business development or affordable housing. To ensure that investment is channeled to truly distressed areas, place-based programs narrow the pool of eligible neighborhoods based on a set of socioeconomic criteria. The criteria, however, may not be targeting the places most in need. In this study, we examine the relationship between neighborhood gentrification status and 2018 eligibility for the New Markets Tax Credits, Opportunity Zones, Low Income Housing Tax Credits, and the Community Development Financial Institutions Program. We find that large percentages of gentrifying neighborhoods are eligible for each of the four programs, with many neighborhoods eligible for multiple programs. The Opportunity Zone program stands out, with the probability of eligibility nearly twice as high for gentrifying tracts than not-gentrifying tracts. We also found that the probability of eligibility increases with a greater percentage of adjacent neighborhoods experiencing gentrification.
Psychological ownership interventions increase interest in claiming government benefits
Wendy De La Rosa et al.
Proceedings of the National Academy of Sciences, 31 August 2021
Abstract:
Each year, eligible individuals forgo billions of dollars in financial assistance in the form of government benefits. To address this participation gap, we identify psychological ownership of government benefits as a factor that significantly influences individuals' interest in applying for government benefits. Psychological ownership refers to how much an individual feels that a target is their own. We propose that the more individuals feel that government benefits are their own, the less likely they are to perceive applying for them as an aversive ask for help, and thus, the more likely they are to pursue them. Three large-scale field experiments among low-income individuals demonstrate that higher psychological ownership framing of government benefits significantly increases participants' pursuit of benefits and outperforms other common psychological interventions. An additional experiment shows that this effect occurs because greater psychological ownership reduces people's general aversion to asking for assistance. Relative to control messages, these psychological ownership interventions increased interest in claiming government benefits by 20% to 128%. These results suggest that psychological ownership framing is an effective tool in the portfolio of potential behavioral science interventions and a simple way to stimulate interest in claiming benefits.