Hilary Hoynes

We use novel, large-scale data on 43 million Americans from the 2000 Census and the 2001 to 2013 American Communities Survey linked to the Social Security Administration’s NUMIDENT to study how a policy-driven increase in economic resources for families affects children’s long-term outcomes. Using variation from the county-level roll-out of the Food Stamps program between 1961 and 1975, we find that children with access to greater economic resources before age five experience an increase of 6 percent of a standard deviation in their adult human capital, 3 percent of a standard deviation in their adult economic self-sufficiency, 8 percent of a standard deviation in the quality of their adult neighborhoods, 0.4 percentage-point increase in longevity, and a 0.5 percentage-point decrease in likelihood of being incarcerated. Based on these estimates, we conclude that Food Stamps’ transfer of resources to families is a highly cost-effective investment into young children, yielding a marginal value of public funds of approximately 56.

This study provides the first comprehensive analysis of the distributional effects of Head Start, using the first national randomized experiment of the Head Start program (the Head Start Impact Study). We examine program effects on cognitive and non-cognitive outcomes and explore the heterogeneous effects of the program through 1st grade by estimating quantile treatment effects under endogeneity (IV-QTE) as well as various types of subgroup mean treatment effects and two-stage least squares treatment effects. We find that (the experimentally manipulated) Head Start attendance leads to large and statistically significant gains in cognitive achievement during the pre-school period and that the gains are largest at the bottom of the distribution. Once the children enter elementary school, the cognitive gains fade out for the full population, but importantly, cognitive gains persist through 1st grade for some Spanish speakers. These results provide strong evidence in favor of a compensatory model of the educational process. Additionally, our findings of large effects at the bottom are consistent with an interpretation that the relatively large gains in the well-studied Perry Preschool Program are in part due to the low baseline skills in the Perry study population. We find no evidence that the counterfactual care setting plays a large role in explaining the differences between the HSIS and Perry findings.

In-work credits grew in popularity worldwide during the late 1990s and 2000s as a means of reforming welfare systems in ways that could both encourage work and reduce poverty. This paper reviews the role of in-work tax credits in theUKand theUS, what is known and remains to be known about their impacts and distributional consequences, and the possibilities for reform. Evidence is clear that in-work credits reduce poverty and can encourage lone parents to work, but have minimal impacts, in aggregate, on second earners. Spending on in-work credits has grown in the UK, but there have been two major overhauls of the way these are structured so that, on current plans, the UK will not have an identifiable in-work credit by 2023. In the US, in-work assistance has grown in generosity and reach since the 1980s, thanks to broad political support for the Earned Income Tax Credit (EITC) and the (less-targeted) Child Tax Credit. Future debates in the UK should focus on the rise of in-work poverty, particularly amongst couples, with some needed focus on the design of in-work benefits, a debate here economic analysis and evidence should have a major role to play. In the US, the policy discussion should be aboutIn-work credits grew in popularity worldwide during the late 1990s and 2000s as a means of reforming welfare systems in ways that could both encourage work and reduce poverty. This paper reviews the role of in-work tax credits in the UK and theUS, what is known and remains to be known about their impacts.
and distributional consequences, and the possibilities for reform. Evidence is
clear that in-work credits reduce poverty and can encourage lone parents to
work, but have minimal impacts, in aggregate, on second earners. Spending on
in-work credits has grown in the UK, but there have been two major overhauls
of the way these are structured so that, on current plans, the UK will not
have an identifiable in-work credit by 2023. In the US, in-work assistance
has grown in generosity and reach since the 1980s, thanks to broad political
support for the Earned Income Tax Credit (EITC) and the (less-targeted) Child
Tax Credit. Future debates in the UK should focus on the rise of in-work
poverty, particularly amongst couples, with some needed focus on the design
of in-work benefits, a debate where economic analysis and evidence should
have a major role to play. In the US, the policy discussion should be about whether to increase substantially the EITC for those without children, and how
best to maintain or expand the credit’s generosity for those with children.

The Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) is one of the most important elements of the social safety net. Unlike most other safety net programs, SNAP varies little across states and over time, which creates challenges for quasi-experimental evaluation. Notably, SNAP benefits are fixed across 48 states; but local food prices vary, leading to geographic variation in the real value – or purchasing power – of SNAP benefits. In this study, we provide the first estimates that leverage variation in SNAP purchasing power across markets to examine effects of SNAP on child health. We link panel data on regional food prices to National Health Interview Survey data and use a fixed effects framework to estimate the relationship between local purchasing power of SNAP and children’s health and health care utilization. We find that lower SNAP purchasing power leads to lower utilization of preventive health care and more days of school missed due to illness. We estimate no effect on parent-reported health status.

We discuss the potential role of Universal Basic Incomes (UBIs) in advanced countries. A feature of advanced economies that distinguishes them from developing countries is the existence of well developed, if often incomplete, safety nets. We develop a framework for describing transfer programs, flexible enough to encompass most existing programs as well as UBIs, and use this framework to compare various UBIs to the existing constellation of programs in the United States. A UBI would direct much larger shares of transfers to childless, non-elderly, non-disabled households than existing programs, and much more to middle-income rather than poor households. A UBI large enough to increase transfers to low-income families would be enormously expensive. We review the labor supply literature for evidence on the likely impacts of a UBI. We argue that the ongoing UBI pilot studies will do little to resolve the major outstanding questions.

The past quarter-century has seen substantial change in the social safety nets for families with children in the United States and Canada. Both countries have moved away from cash welfare, but the United States has relied more on work requirements. We examine the implications for the employment and poverty of low-educated single mothers. We find that employment improved substantially in both countries, absolutely and relative to a control group of single women without children. Poverty rates also declined in both countries, with more of the decline coming through market income in the United States and benefit income in Canada.

In this paper, we examine what groups of children are served by core childhood social safety net programs -- including Medicaid, EITC, CTC, SNAP, and AFDC/TANF -- and how they have changed over time. We find that virtually all gains in spending on the social safety net for children since 1990 have gone to families with earnings, and to families with income above the poverty line. These trends are the result of welfare reform and the expansion of in-work tax credits. We review the available research and find that access to safety net programs during childhood improves outcomes for children and society over the long run. This evidence suggests that the recent changes to the social safety net may have lasting negative impacts on the poorest children.

We examine the effect of the EITC on the poverty and income of single mothers with children using a quasi-experiment approach that leverages variation in generosity due to policy expansions across tax years and family sizes. We find that the income increasing effects of the EITC are concentrated between 75% and 150% of income-to-poverty with little effect at the lowest income levels (50% poverty and below) and at levels of 250% of poverty and higher. Specifically, a policy-induced $1000 increase in the EITC leads to an 8.4 percentage point reduction in the share of families with after tax and transfer income below 100% poverty. These results are robust to a rich set of controls and whether we compare single women with and without children or compare women with one child versus women with two or more children. They are also robust to whether we limit our analysis to the sharp increase in the 1993 expansion or use the full period of policy expansion, back to the 1986 Tax Reform Act. Importantly, event study estimates show no evidence of differential pre-trends, providing strong evidence in support of our research design. We use these results to show that by capturing the indirect effects of the credit on earnings, static calculations of the anti-poverty effects of the EITC (such as those released based on the Supplemental Poverty Measure) may be underestimated by almost 50 percent. Ours is the first paper to simultaneously estimate the combined direct and indirect effects of the EITC, to quantify how much we miss by ignoring the behavior effect, and to estimate the effects across the income distribution. 

The Earned Income Tax Credit (EITC) is a refundable tax credit that promotes work. Research has shown that it also reduces poverty and improves health and education outcomes. The maximum credit for families with two or fewer children has remained flat in inflation-adjusted terms since 1996. Over the same period, earnings prospects have stagnated or diminished for many Americans, and prime-age employment rates have fallen. This paper proposes to build on the successes of the EITC with a ten percent acrossthe-board increase in the federal credit. This expansion would provide a meaningful offset to stagnating real wages, encourage more people to enter employment, lift approximately 600,000 individuals out of poverty, and improve health and education outcomes for millions of children.

In this paper, we assess whether welfare reform affects earnings only through mean impacts that are constant within but vary across subgroups. This is important because researchers interested in treatment effect heterogeneity typically restrict their attention to estimating mean impacts that are only allowed to vary across subgroups. Using a novel approach to simulating treatment group earnings under the constant mean-impacts within subgroup model, we find that this model does a poor job of capturing the treatment e ect heterogeneity for Connecticut's Jobs First welfare reform experiment. Notably, ignoring within-group heterogeneity would lead one to miss evidence that the Jobs First experiment's effects are consistent with central predictions of basic labor supply theory.

In this paper, we comprehensively examine the effects of the Great Recession on child poverty, with particular attention to the role of the social safety net in mitigating the adverse effects of shocks to earnings and income. Using a state panel data model and data for 2000 to 2014, we estimate the relationship between the business cycle and child poverty, and we examine how and to what extent the safety net is providing protection to at-risk children. We find compelling evidence that the safety net provides protection; that is, the cyclicality of after-tax-and-transfer child poverty is significantly attenuated relative to the cyclicality of private income poverty. We also find that the protective effect of the safety net is not similar across demographic groups, and that children from more disadvantaged backgrounds, such as those living with non-Hispanic black or Hispanic, single, or particularly immigrant household heads-or immigrant spouses, experience larger poverty cyclicality than non-Hispanic white, married, or native household heads with native spouses. Our findings hold across a host of choices for how to define poverty. These include measures based on absolute thresholds or more relative thresholds. They also hold for measures of resources that include not only cash and near cash transfers net of taxes but also several measures of medical benefits.

The cash and near cash safety net in the U.S. has undergone a dramatic transformation in the past fifteen years. Federal welfare reform has led to the “elimination of welfare as we know it” and several tax reforms have substantially increased the role of “in-work”' assistance. In 2012, we spent more than 7 dollars on the Earned Income Tax Credit (EITC) for every dollar spent on cash benefits through Temporary Assistance for Needy Families (TANF), whereas in 1994 on the eve of federal welfare reform these programs were about equal in size. In this paper, we evaluate and test whether the EITC demonstrates a defining feature of a safety net program—that it responds to economic need. In particular, we explore how EITC participation and expenditures change with the business cycle. The fact that the EITC requires earned income leads to a theoretical ambiguity in the cyclical responsiveness of the credit. We use administrative IRS data to examine the relationship between business cycles and the EITC program. Our empirical strategy relies on exploiting differences in the timing and severity of economic cycles across states. The results show that higher unemployment rates lead to an increase in EITC recipients and total dollar amounts of credits for married couples. On the other hand, the effect of business cycles on use of the EITC is insignificant for single individuals, whether measured by the number of recipients or expenditures. Estimates that further cut by education show that the protective effects of the EITC are concentrated among those with higher skills (and potential earnings). In sum, our results show that the EITC serves to mitigate the effects of income shocks for married couples with children and other groups likely to have moderate earnings, but does not do so for the majority of recipients—single parents with children. The patterns we identify are consistent with the predictions of static labor supply theory, which we confirm with an analysis of earnings, and with expectations about how economic shocks are likely to vary across family type and skill group.

In this paper, we review the most prominent provision of the federal income tax code that targets low-income tax filers, the Earned Income Tax Credit (EITC), as well as the structurally similar Child Tax Credit (CTC). We frame the paper around what we see as the programs’ goals: distributional, promoting work, and limiting administrative and compliance costs. We review what is known about program impacts and distributional consequences under current law, drawing on simulations from the Tax Policy Center. We conclude that the EITC is quite successful in meeting its three goals. In contrast, most of the benefits of the CTC go to higher income households. In addition to analyzing current law, we assess possible reforms that would reach groups – for the EITC, those without children; for the CTC, those with very low earnings – who are largely missed under current policy.

The Great Recession was the longest and by some measures the most severe economic downturn in the postwar period. The experience revealed important weaknesses in the central cash welfare program for families with children in the United States, Temporary Assistance for Needy Families (TANF). First, TANF fails to reach a sizeable share of needy families, does little to reduce deep poverty, and is not targeted to the most needy. Second, in its current form the program does not automatically expand during economic downturns, when the need for the program is likely greatest and the additional consumer spending would be particularly welcome. To strengthen TANF, we propose reforms to expand its reach, improve its responsiveness to cyclical downturns, and enhance its transparency. Together these reforms would make the program more effective in protecting families from deep poverty.

We examine characteristics and correlates of households in the United States that are most likely to have children at risk of inadequate nutrition – those that report very low food security (VLFS) among their children. Using 11 years of the Current Population Survey, plus data from the National Health and Nutrition Examination Survey, we describe these households in great detail with the goal of trying to understand how these households differ from households without such severe food insecurity. While household income certainly plays an important role in determining VLFS among children, we find that even after flexibly controlling for income-to-poverty rates some household characteristics and patterns of program participation have important additional explanatory power. Finally, our examination of the NHANES data suggests an important role for both mental and physical health in determining the food security status of children. 

A growing economics literature establishes a causal link between in utero shocks and health and human capital in adulthood. Most studies rely on extreme negative shocks such as famine and pandemics. We are the first to examine the impact of a positive and policy-driven change in economic resources available in utero and during childhood. In particular, we focus on the introduction of a key element of the U.S. safety net, the Food Stamp Program, which was rolled out across counties in the U.S. between 1961 and 1975. We use the Panel Study of Income Dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes. The identification comes from variation across counties and over birth cohorts in availability of the food stamp program. Our findings indicate that the food stamp program has effects decades after initial exposure. Specifically, access to food stamps in childhood leads to a significant reduction in the incidence of “metabolic syndrome” (obesity, high blood pressure, and diabetes) and, for women, an increase in economic self-sufficiency. Overall, our results suggest substantial internal and external benefits of the safety net that have not previously been quantified.

Much attention has been given to the large increase in safety net spending, particularly in Unemployment Insurance and Food Stamp spending, during the Great Recession. In this paper we examine the relationship between poverty, the social safety net, and business cycles historically and test whether there has been a significant change in this relationship during the Great Recession. We do so using an alternative measure of poverty that incorporates taxes and in-kind transfers. We explore the mediating role played by four core safety net programs—Food Stamps, cash welfare (AFDC/TANF), the Earned Income Tax Credit, and Unemployment Insurance—in buffering families from negative economic shocks. This analysis yields several important findings. Our most robust and important finding is the safety net is doing less to provide protection for the most disadvantaged. In the post-welfare reform world, TANF did not respond in the Great Recession and extreme poverty is more cyclical than in prior recessions. On the other hand, Food Stamps and UI are providing more protection¬-or at least providing no less protection-in the Great Recession, although these results are less robust across our different models. These programs are more likely to affect households somewhat higher up the income distribution; we find some evidence of a reduction in cyclicality at 100% poverty and little evidence about this at higher income-to-poverty levels.

In this chapter, we describe the relationship between SNAP and food consumption. We first present the neoclassical framework for analyzing in-kind transfers, which unambiguously predicts that SNAP will increase food consumption, and follow this with an explanation of the SNAP benefit formula. We then present new evidence from the Consumer Expenditure Survey on food spending patterns among households overall, SNAP households, and other subgroups of interest. We find that a substantial fraction of SNAP households spend an amount that is above the program’s needs standard. We also show that the relationship between family size and food spending is steeper than the slope of the SNAP needs parameter, and that large families are more likely than small families to spend less on food than the needs standard amount. Actual benefit levels are smaller than the needs standards, and we find that most families spend more on food than their predicted benefit allotment. Because of this, according to the neoclassical model, most families are predicted to treat their benefits like cash.

We use quantile treatment effects estimation to examine the consequences of the random-assignment New York City School Choice Scholarship Program (NYCSCSP) across the distribution of student achievement. Our analyses suggest that the program had negligible and statistically insignificant effects across the skill distribution. In addition to contributing to the literature on school choice, the paper illustrates several ways in which distributional effects estimation can enrich educational research: First, we demonstrate that moving beyond a focus on mean effects estimation makes it possible to generate and test new hypotheses about the heterogeneity of educational treatment effects that speak to the justification for many interventions. Second, we demonstrate that distributional effects can uncover issues even with well-studied datasets by forcing analysts to view their data in new ways. Finally, such estimators highlight where in the overall national distribution data from particular interventions lie; this is important for exploring the external validity of the intervention’s effects.

This paper evaluates the health impact of a central piece in the U.S. safety net for families with children: the Earned Income Tax Credit. Using tax-reform induced variation in the federal EITC, we examine the impact of the credit on infant health outcomes. We find that increased EITC income reduces the incidence of low birth weight and increases mean birth weight.  For single low education (12 years or less) mothers, a policy-induced treatment on the treated increase of $1000 in after-tax income is associated with a 0.17 to 0.31 percentage point decrease in low birth weight status.  Given roughly 10.7% of treated children were low birth weight, this represents a 1.6% to 2.9% decline.  These impacts are evident with difference-in-difference models and event study analyses, and show larger impacts for births to African American mothers. Our results suggest that part of the mechanism for this improvement in birth outcomes is the result of more prenatal care and less negative health behaviors (smoking). Additionally, we find a shift from public to private insurance coverage, and for some a reduction in insurance overall, indicating a potential change in the quality and perhaps quantity of coverage.  We contribute to the literature by establishing that a policy-driven increase in income and labor supply can improve health, and illustrating a health impact of a non-health program. More generally, we demonstrate the potential for positive external benefits of the social safety net.

Beginning with the 1996 federal welfare reform law many of the central safety net programs in the U.S. eliminated eligibility for legal immigrants, who had been previously eligible on the same terms as citizens. These dramatic cutbacks affected eligibility not only for cash welfare assistance for families with children, but also for food stamps, Medicaid, SCHIP, and SSI. In this paper, we comprehensively examine the status of the U.S. safety net for immigrants and their family members. We document the policy changes that affected immigrant eligibility for these programs and use the CPS for 1995-2010 to analyze trends in program participation, income, and poverty among immigrants (and natives). We pay particular attention to the recent period and examine how immigrants and their children are faring in the “Great Recession” with an eye toward revealing how these policy changes have affected the success of the safety net in protecting this population.
 

The Great Recession generated large reductions in employment, earnings, he Great Recession generated large reductions in employment, earnings, and income for workers and families in the United States. The seasonally and income for workers and families in the United States. The seasonally adjusted unemployment rate increased from 5 percent in December 2007 to adjusted unemployment rate increased from 5 percent in December 2007 to 9.5 percent in June 2009, the start and end of the recession according to the National 9.5 percent in June 2009, the start and end of the recession according to the National Bureau of Economic Research. From 2007 to 2010, median real family income fell by 6 percent and the poverty rate 2007 to 2010, median real family income fell by 6 percent and the poverty rate increased from 12.5 percent to 15.1 percent (DeNavas-Walt, Proctor, and Smith increased from 12.5 percent to 15.1 percent (DeNavas-Walt, Proctor, and Smith 2011). The recovery since June 2009 has been slow relative to historical averages. 2011). The recovery since June 2009 has been slow relative to historical averages. In the more than two and a half years since the offi cial start of the recovery, the In the more than two and a half years since the offi cial start of the recovery, the unemployment rate has fallen by just over a percentage point, reaching 8.3 percent unemployment rate has fallen by just over a percentage point, reaching 8.3 percent in February 2012. The effects of the Great Recession, however, are not experienced in February 2012. The effects of the Great Recession, however, are not experienced equally by all workers. National statistics can obscure dramatic differences in the equally by all workers. National statistics can obscure dramatic differences in the severity of the cyclical impacts for different groups. For example, men experienced severity of the cyclical impacts for different groups. For example, men experienced signifi cantly larger job loss in the Great Recession compared to women, but during signifi cantly larger job loss in the Great Recession compared to women, but during the recovery, male employment is picking up more rapidly (Kochhar 2011). the recovery, male employment is picking up more rapidly (Kochhar 2011).

Labor supply theory makes strong predictions about how the introduction or expansion of a social welfare program impacts work effort. Although there is a large literature on the work incentive effects of AFDC and the EITC, relatively little is known about the work incentive effects of the Food Stamp Program and none of the existing literature is based on quasi-experimental methods. We use the cross-county introduction of the program in the 1960s and 1970s to estimate the impact of the program on the extensive and intensive margins of labor supply, earnings, and family cash income. Consistent with theory, we find reductions in employment and hours worked when food stamps are introduced. The reductions are concentrated among families headed by single woman.

This paper estimates the total value that individuals derive from their state's tax-and-transfer program, and shows how this value varies by income. The paper decomposes this total value into two components: redistributive value, which is due to predictable changes in income (and family circumstances), and insurance value, which occurs when taxes and transfers compensate for unexpected income shocks. Our approach is a forward-looking one, where we examine income and transfers net of taxes over a 10-year period. We model state taxes (personal income taxes, the EITC, and sales taxes) and state means-tested transfers (AFDC/TANF and Medicaid/SCHIP). The calculations are made using the Panel Study of Income Dynamics and allow for analysis of the role of changes in tax-and-transfer programs, demographics, and income in the value of state net benefits over a period of more than 30 years. Wefind that the redistributive value of state tax-and-transfer programs sharply declines with income, but that the insurance value is increasing in income. The resulting
total value still declines with income, but not nearly as sharply as the redistributive value. Hence, the insurance value mitigates the incentives for mobility that would “undo” state redistributive spending.

This paper evaluates the health impacts of a signature initiative of the War on Poverty: the introduction of the modern Food Stamp Program (FSP). Using variation in the month FSP began operating in each U.S. county, we find that pregnancies exposed to FSP three months prior to birth yielded deliveries with increased birth weight, with the largest gains at the lowest birth weights. We also find small but statistically insignificant improvements in neonatal mortality. We conclude that the sizable increase in income from FSP improved birth outcomes for both whites and African Americans, with larger impacts for African American mothers.

The goal of federal food and nutrition programs in the United States is to improve the nutritional well-being and health of low income families. A large body of literature evaluates the extent to which the Supplemental Program for Women Infants and Children (WIC) has accomplished this goal, but most studies have been based on research designs that compare program participants to non-participants. If selection into these programs is non-random then such comparisons will lead to biased estimates of the program's true effects. In this study we use the rollout of the WIC program across counties to estimate the impact of the program on infant health. We find that the implementation of WIC led to an increase in average birth weight and a decrease in the fraction of births that are classified as low birth weight. We find no evidence that these estimates are driven by changes in fertility or selection into live births. Our preferred estimates suggest thatWIC initiation raised average birth weight by 2 g, or by 7 g among infants born to mothers with low education levels. These translate into estimated birth weight increases among participating mothers of approximately 18 to 29 g. Estimated treatments on the treated impacts among infants born to participating mothers with low education are of similar magnitude.

The 1996 welfare reform led to sweeping changes to the central cash safety net program for families with children. Along with other changes, the reform imposed lifetime time limits for receipt of cash welfare, effectively ending its entitlement nature for these families. Despite dire predictions, previous research has shown that program caseloads declined and employment increased, with no detectible increase in poverty or worsening of child well-being. We reevaluate these results in light of the severe 2007–09 recession. In particular, we examine how welfare reform has altered the cyclicality of the response of caseloads and family well-being. We find that use of food stamps and noncash safety net program participation have become significantly more responsive to the economic cycle after welfare reform, rising more when unemployment increases. By contrast, we find no evidence that cash welfare for families with children is more responsive, and some evidence that it might be less so. We find some evidence that poverty increases more with increases in the unemployment rate after reform, and none that it increases less. We find no significant effects of reform on the cyclical responsiveness of food consumption, food insecurity, health insurance, household crowding, or health.

This paper examines the distributional and behavioral effects of the Earned Income Tax Credit (EITC). We chart the growth of the program over time, and argue that several expansions show that real responses to taxes are important. We use tax data to show the distribution of benefi ts by income and family size, and examine the impacts of hypothetical reforms to the credit. Finally, we calculate the effi ciency effects of marginal changes to EITC parameters

Economists have strong theoretical predictions about how in-kind transfers, such as providing vouchers for food, impact consumption. Despite the prominence of the theory, there is little empirical work on responses to in-kind transfers, and most existing work fails to support the canonical theoretical model. We employ difference-indifference methods to estimate the impact of program introduction on food spending. Consistent with predictions, we find that food stamps reduce out-of-pocket food spending and increase overall food expenditures. We also find that households are inframarginal and respond similarly to one dollar in cash income and one dollar in food stamps.

A large literature has been concerned with the impacts of recent welfare reforms on income, earnings, transfers, and labor-force attachment. While one strand of this literature relies on observational studies conducted with large survey-sample data sets, a second makes use of data generated by experimental evaluations of changes to means-tested programs. Much of the overall literature has focused on mean impacts. In this paper, we use random-assignment experimental data from Canada's Self-Sufficiency Project (SSP) to look at impacts of this unique reform on the distributions of income, earnings, and transfers. SSP offered members of the treatment group a generous subsidy for working full time. Quantile treatment effect (QTE) estimates show there was considerable heterogeneity in the impacts of SSP on the distributions of earnings, transfers, and total income; this heterogeneity would be missed by looking only at average treatment effects. Moreover, these heterogeneous impacts are consistent with the predictions of labor supply theory. During the period when the subsidy is available, the SSP impact on the earnings distribution is zero for the bottom half of the distribution. The quantiles of the SSP earnings distribution are higher for much of the upper third of the distribution except at the very top, where the quantiles of the earnings distribution are the same under either program or possibly lower under SSP. Further, during the period when SSP receipt was possible, the impacts on the quantiles of the distributions of transfer payments (Income Assistance plus the subsidy) and total income (earnings plus transfers) are also different at different points of the distribution. In particular, positive impacts on the quantiles of the transfer distribution are concentrated at the lower end of the transfer distribution, while positive impacts on the quantiles of the income distribution are concentrated in the upper end of the income distribution. Impacts of SSP on these distributions were essentially zero after the subsidy was no longer available.

Little is known about welfare reform’s effects on family structure and children’s living arrangements, an important focus for reformers. Using March CPS data, we find that state welfare waivers are associated with children being less likely to live with unmarried parents, more likely to live with married parents, and more likely to live with neither parent. Children living with neither parent are living with grandparents or other relatives, or rarely, in foster care. The estimates vary somewhat by children’s race and ethnicity. Due to the limited variation in TANF’s implementation timing across states, we focus on the waiver results.

Labor supply theory predicts systematic heterogeneity in the impact of recent welfare reforms on earnings, transfers, and income. Yet most welfare reform research focuses on mean impacts. We investigate the importance of heterogeneity using random-assignment data from Connecticut's Jobs First waiver, which features key elements of post-1996 welfare programs. Estimated quantile treatment effects exhibit the substantial heterogeneity predicted by labor supply theory. Thus mean impacts miss a great deal. Looking separately at samples of dropouts and other women does not improve the performance of mean impacts. We conclude that welfare reform's e ects are likely both more varied and more extensive than has been recognized.

Despite robust growth in real per capita GDP over the last three decades, the U.S. poverty rate has changed very little. In an effort to better understand this disconnect, we document and quantify the relationship between poverty and four different factors that may affect poverty and its evolution over time: labor market opportunities, family structure, anti-poverty programs, and immigration. We find that the relationship between the macro-economy and poverty has weakened over time. Nevertheless, changes in labor market opportunities predict changes in the poverty rate rather well. We also find that changes in female labor supply should have reduced poverty, but was counteracted by an increase in the rate of female headship. Changes in the number and composition of immigrants and changes in the generosity of anti-poverty programs seem to have had little effect.

Twenty-two million families currently receive a total of $34 billion in benefits from the earned income tax credit (EITC). In fact, the EITC is the largest cash-transfer program for lower-income families at the federal level. An unusual feature of the credit is its explicit goal to use the tax system to encourage and support those who choose to work. A large body of work has evaluated the labor supply effects of the EITC and has generated several important findings regarding the behavioral response to taxes. Perhaps the main lesson learned from the evidence is the confirmation that real responses to taxes are important; labor sup- ply does respond to the EITC. The second major lesson is related to the nature of the labor supply response. A consistent finding is that labor supply responses are concentrated along the extensive (entry) margin, rather than the intensive (hours worked) margin. This distinction has important implications for the design of tax-transfer programs and for the welfare evaluation of tax reforms.

The EITC is currently the largest, federal cash-transfer program for low-income families, with expenditures of almost $34 billion dollars in 2002. Advocates of the credit argue that this redistribution occurs with much less distortion to labor supply than that caused by other elements of the welfare system. Empirical evidence has established that the credit “encourages work effort” among eligible female household heads. Less recognized is the fact that these positive work incentives are unlikely to hold among married couples. Theory suggests that while primary earners (typically men) would increase labor force participation, secondary earners would reduce their labor supply in response to an EITC. We study the hours worked response of married couples to several EITC expansions between 1984 and 1996. While our primary interest is the response to changes in the budget set induced by the EITC, our identification strategy takes account of budget set changes caused by federal tax policy, as well as cross-sectional differences in non-labor income and family size. We estimate reduced-form hours of work equations using instrumental variables to account for the endogeneity of net of tax wages and virtual income. Our instruments are based on tax reforms and trace out the budget set. The results show that EITC expansions between 1984 and 1996 led to modest reductions in hours worked by married men and married women. Overall, married women in the labor force are estimated to decrease hours worked by between 1 and 4 percent. Women in the phase-out range of the credit experience the greatest reductions, between 3 and 17 percent. Overall, the evidence suggests that family labor supply and pretax earnings fell.

We investigate the relationship between welfare reform and health insurance, health care utilization, and self-reported measures of health status for women aged 20-45, using nationally representative data from the Behavioral Risk Factor Surveillance System. We present estimates from both difference-in-difference models (applied to single women and single women with children) and difference-in-difference-in-difference models (using married women and single women without children as comparison groups). We find that welfare reform is associated with reductions in health insurance coverage and specific measures of health care utilization, as well as an increase in the likelihood of needing care but finding it unaffordable. We find no statistically significant effects of reform on health status. Overall, effects are somewhat larger for Hispanics compared to blacks and low educated women.

A distinguishing feature of recent changes to the US system of public assistance is its increasing focus onworking families and reliance on the tax system to transfer dollars to needy families. After a decade in near total obscurity, the earned income tax credit (EITC) was expanded to become the largest cash-transfer program for lower-income families with children. Advocates of the EITC argue that, unlike traditional welfare, the credit helps ‘‘promote both the values of family and work’’. Indeed, empirical evidence consistent with economic theory suggests that the EITC promotes employment among eligible unmarried women with children. To target benefits to lower-income families, however, the EITC is based on family income, leading to traditional welfare-type disincentives for most eligible secondary earners. In fact, the EITC is likely to reduce overall family labor supply among married couples. This paper examines the labor force participation response of married couples to EITC expansions between 1984 and 1996. The effect of the credit is estimated using both quasiexperimental and traditional reduced-form labor supply models. Results from both models show the same qualitative conclusion, that the EITC expansions reduced total family labor supply of married couples. In all cases, we find a decline in labor force participation by married women that more than offsets any rise in participation by their spouses. While the labor force participation rate of married men increased by about 0.2 percentage points, that of married women decreased by just over a full percentage point. These aggregate effects mask substantial heterogeneity in the population. Women facing the strongest disincentives were more than 2 percentage points less likely to work after the expansions. These findings imply that the EITC is effectively subsidizing married mothers to stay home, and therefore, have implications for the design of the program.

The goal of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was to end the dependency of needy parents on government benefits, in part by promoting marriage. The pre-reform welfare system was widely believed to discourage marriage because it primarily provided benefits to single mothers. However, welfare reform may have actually decreased the incentives to be married by giving women greater financial independence via the program's new emphasis on work. This paper uses Vital Statistics data on marriages and divorces during 1989-2000 to examine the role of welfare reform (state waivers and TANF implementation) and other state-level variables on flows into and out of marriage. The results indicate that welfare reform has led to fewer new divorces and fewer new marriages, although the latter result is sensitive to specification and data choice.

This paper examines the work incentives in the Social Security Disability Insurance (SSDI) Program under current law and proposed reforms. We begin with a discussion of the expected effect of the program on work effort according to the basic static labor supply model. In addition, we provide a numerical simulation that shows the magnitude of the monetary incentives provided by current law and the reforms for different categories of individuals. We find that the proposed reforms have ambiguous effects on work effort and could, contrary to perceived wisdom, possibly reduce work effort and increase the number of SSDI recipients.

The aim of this paper is to examine the labour market impact of in-work benefit reform in the UK. Evidence is drawn from the impact of earlier reforms in the UK and similar reforms in the US. We focus on the impact on labour supply – employment and hours of work. In the US a large proportion of the dramatic increase in participation among low educated single parents in the 1990s has been attributed to the increased generosity of the EITC. The impact of apparently similar reforms in the UK appears to have been smaller. We argue that these differences can be attributed to four factors: the impact of interactions with other means tested benefits in the UK; the importance of workless couples with children in the UK, who make up nearly 50% of the recipients in the UK; the level of income support given to non-working parents in the UK; and the strength of the economic upturn in the US during the mid 1990s.

Periods of rapid U.S. economic growth during the 1960s and 1970s coincided with improved living standards for many segments of the population, including the disadvantaged as well as the affluent, suggesting to some that a rising economic tide lifts all demographic boats. This paper investigates the impact of U.S. business cycle conditions on population well-being since the 1970s. Aggregate employment and hours worked in this period are strongly procyclical, particularly for low-skilled workers, while aggregate real wages are only mildly procyclical. Similar patterns appear in a balanced panel of PSID respondents that removes the effects of changing workforce composition, though the magnitude of the responsiveness of real wages to unemployment appears to have declined in the last 20 years. Economic upturns increase the likelihood that workers acquire jobs in sectors with positively sloped career ladders. Spending by state and local governments in all categories rises during economic expansions, including welfare spending, for which needs vary countercyclically. Since the disadvantaged are likely to benefit disproportionately from such government spending, it follows that the public finances also contribute to conveying the benefits of a strong economy to diverse population groups.

This paper documents changes in the tax consequence of marriage over the period 1984 to 1997. Reversing the impact of the 1986 Tax Reform Act, tax acts in 1990 and 1993 are found to increasingly tax marriage. Our decomposition of different components show that, altogether, tax laws explain most (55–60 percent) of the change in the tax cost of marriage between 1984 and 1997. Our decompositions also show that the non–tax changes are almost exclusively driven by the changing labor market attachment of married women (as measured by their share of family earnings) and not by family size or total family income.

This paper examines the impact of changes in labor market conditions on participation in the Aid to Families with Dependent Children (AFDC) program in California. Transitions off welfare and transitions back onto welfare are estimated using discrete duration models that control for local labor market conditions, demographic and neighborhood characteristics, duration effects, county-fixed effects, time effects, and county- speciŽfic time trends. The results show that higher unemployment rates, lower employment growth, lower employment-to-population ratios, and lower wage growth are associated with longer welfare spells and higher recidivism rates. Hispanics, blacks, and two-parent families are the groups that are most sensitive to changes in local labor market conditions.

In this paper, we examine the role played by differential mortality in esti- mates of life cycle wealth profiles. Our study makes three contributions. First, we show that the Survey of Income and Program Participation (SIPP) provides reliable data on mortality as compared to the US life ta- ble data. Second, we provide estimates of the relationship between mortal- ity and wealth and show strong evidence of differential mortality. Lastly, and most importantly, we show that the differences in mortality by wealth-age profiles.

In this paper, I examine the effect of business cycles on the employment, earnings, and income of persons in different demographic groups. I classify individuals by sex, education, and race. The analysis uses data from the Current Population Survey’s Outgoing Rotation Group file, covering the period 1979-1992, and March Annual Demographic files (ADF) covering the period 1975-1997. Many different individual and family outcome measures are considered including: employment to population ratios, weekly earnings, hourly earnings, annual hours, annual earnings, family earnings, family transfer income, and total family income. The regression model is specified such that the key parameters measure how the labor market outcomes of less skilled workers vary with the business cycle relative to the variability for high skill groups. The analysis uses variation across MSAs in the timing and severity of shocks. The results consistently show that individuals with lower education levels, nonwhites, and low skill women experience greater cyclical fluctuation than high skill men. These results are the most striking when examining comprehensive measures of labor force activity such as the likelihood of full-time year around work. Government transfers and the earnings of other family members decrease the differences between groups, as business cycles have more skill-group neutral effects on family income than individual earnings. The paper examines the stability of these results by comparing evidence across the 1982 and1992 recessions. The evidence suggests that the 1992 recession led to more uniform effects across skill groups than earlier cycles.

Previous studies have examined whether the welfare system has contributed to the dramatic increase in single-parent families. This paper explores why the results in this literature are sensitive to the presence of state fixed effects. It considers one natural explanation, namely that the composition of the population differs across states in ways that are related to welfare program generosity. After controlling for individual effects the results provide no evidence that welfare raises the propensity to form female-headed households for either whites or blacks. These results illustrate the potential pitfalls of assuming that state factors are fixed over a long period of time. They also suggest that previous studies may have overstated the effect of welfare programs on family structure.