Poor Issues
Too Much of a Good Thing? How Narrow Targeting and Policy Interactions Influence Responses to California’s EITC
David Neumark & Zeyu Li
NBER Working Paper, October 2024
Abstract:
California has the highest Earned Income Tax (EITC) supplement to the federal EITC, with an 85% supplement rate. However, we find that despite the apparent generosity of the California EITC, there is no employment effect on less-skilled single mothers, in sharp contrast to the evidence of positive extensive margin effects of other state EITC supplements, and of the federal EITC. Our analysis points to two reasons why, unlike other EITCs, California’s EITC does not appear to have an extensive margin effect. First, most states simply supplement the federal EITC by a fixed percentage. In contrast, in California the maximum credit is reached at a much lower income level, the state EITC begins to phase out as soon as the maximum EITC payment is reached (i.e., there is no plateau), and the phase-out rate is as steep as the phase-in rate. The result is a much higher marginal tax rate that sets in at a much lower income level. Second, California has a very high (and rising) minimum wage. The interaction between a high minimum wage and the unique budget constraint created by the California EITC implies that workers who work more than a relatively low number of hours are unlikely to gain any extra income because of the EITC.
Nonpayment and Eviction in the Rental Housing Market
John Eric Humphries et al.
NBER Working Paper, November 2024
Abstract:
Recent research has documented the prevalence and consequences of evictions in the United States, but our understanding of the drivers of eviction and the scope for policy to reduce evictions remains limited. We use novel lease-level ledger data from high-eviction rental markets to characterize key determinants of landlord eviction decisions: the persistence of shocks to tenant default risk, landlords' information about these shocks, and landlords' costs of eviction. Our data show that nonpayment is common, is often tolerated by landlords, and is often followed by recovery, suggesting that landlords face a trade-off between initiating a costly eviction or waiting to learn whether a tenant can continue paying. We develop and estimate a dynamic discrete choice model of the eviction decision that captures this trade-off. Estimated eviction costs are on the order of 2 to 3 months of rent, and the majority of evictions involve tenants who are unlikely to pay going forward. As a result, while commonly-proposed policies can generate additional forbearance for tenants, they do not prevent most evictions. Compared to policies that create delays in the eviction process, increasing filing fees or providing short-term rent subsidies are more likely to prevent evictions of tenants who would resume paying.
Assessing the Burden of Electrical, Elevator, Heat, Hot Water, and Water Service Interruptions in New York City Public Housing
Nina Flores et al.
Journal of Urban Health, October 2024, Pages 990–999
Abstract:
Reliable electricity, elevators, heat, hot water, and water are aspects of safe and accessible housing. Interruptions to these services represent a persistent challenge faced by public housing residents in the New York City Housing Authority (NYCHA). We compiled outage data spanning 2020–2022 from NYCHA’s online service interruptions portal and paired these data with demographic and meteorological sources to understand the burden of these outages. To ease dissemination of these data -- a spatiotemporally granular outage dataset that could fill gaps surrounding urban outage health impacts -- we provide a public dashboard for visualization and download of the service interruption data in an analysis-ready format. We demonstrated that (1) outages often exceeded health-relevant restoration windows (e.g., 8 h for electrical interruptions); (2) senior developments (exclusively residents 62 +) had the longest duration of elevator, heat, and hot water outages; and (3) outages sometimes overlapped with temperature extremes -- potentially increasing their health risk. Residents of NYCHA, who are predominately low-income, Black, and Hispanic face a disproportionate burden of service interruptions. Like all New Yorkers, NYCHA residents deserve to live in dignified housing that is safe and accessible. Addressing service interruptions are one way to make public housing safer and push toward climate and environmental justice.
How Do Holistic Wrap-Around Anti-Poverty Programs Affect Employment and Individualized Outcomes?
Javier Espinosa et al.
NBER Working Paper, September 2024
Abstract:
A new wave of social service programs aims to build a pathway out of poverty by helping clients define their own goals and then supporting them flexibly and intensively over multiple years to meet those goals. We conduct a randomized controlled trial of one such program. Participants randomly assigned to intensive, holistic, wrap-around services have 10 percentage points higher employment rates after one year compared with a control group offered only help with an immediate need. Most of this effect appears to persist after programming ends. However, we find limited evidence that intensive, holistic services affect areas beyond employment, even when other areas of life are participants’ primary goals. We find some evidence that the program works by increasing hopefulness and agency among participants, which may be more useful in supporting labor force participation than in meeting other goals.
Short-term labor supply response to the timing of transfer payments: Evidence from the SNAP program
Mindy Marks, Silvia Prina & Redina Tahaj
Labour Economics, December 2024
Abstract:
We study the effect of the timing of SNAP payments on weekly labor supply using data from the CPS. We rely on exogenous variation in the fielding of CPS interviews relative to benefit receipt to estimate labor supply of SNAP eligible individuals at the end of their SNAP benefit cycle (i.e. about to receive benefits) compared to individuals at the start of their cycle (i.e. just received benefits). We find that the timing of SNAP benefits impacts labor supply at the intensive margin, while the extensive margin is unaffected. Conditional on being employed, eligible individuals at the end of their SNAP cycle are more likely to be absent from work compared to individuals at the start of their SNAP cycle. They are also less likely to temporarily shift to full time work. Results are more pronounced for individuals with higher predicted benefit amounts. Our findings suggest that a worsening of individuals’ status (e.g. health problems, child care issues) at the end of their SNAP cycle adversely impacts short-term work presence.
Work, Poverty, and Social Benefits Over the Past Three Decades
Lisa Barrow, Diane Schanzenbach & Bea Rivera
Federal Reserve Working Paper, October 2024
Abstract:
Understanding the evolving interactions between employment, social benefits, and families' well-being is key to designing better policies to both protect families and foster economic growth. Employment both overall and among those living in low-income families has been on a downward trajectory across the last three decades. One notable exception is that low-income women with children were increasingly likely to work between 1992 and 1999 in the aftermath of large changes to social safety net programs to provide more incentives and rewards for work. Since then, low-income women with children have been more likely to be employed than childless women. Over time, payments from social benefits programs have made up a larger share of income among low-income families with children and relatively higher earnings. Among low-income families without children, social benefits have not changed much over time.
Poverty, Hardship, and Government Transfers
Bruce Meyer, Jeehoon Han & James Sullivan
NBER Working Paper, October 2024
Abstract:
We examine how the well-being of those with few resources changed, amidst economic disruption and large, transitory government transfers. We find that in the years leading up to the pandemic and in 2020, the patterns for income and consumption poverty were very similar. In 2021 and 2022, however, changes in income and consumption poverty were quite different -- consumption poverty fell less than income poverty in 2021, and then income poverty rose sharply in 2022 while consumption poverty continued to decline. Reports of hardships rose in 2022 for both families with and without children, suggesting increased concern about financial well-being as COVID-era transfer programs expired. A key difference between income and consumption measures appears to be saving during the pandemic followed by dissaving, even among those near the poverty line. This finding indicates that permanent income models can even be relevant when low-income households, that typically have very limited saving, receive very large transitory payments. Unlike past academic studies and numerous politicians and pundits that have attributed most of the decline in income poverty in 2021, and its subsequent rise in 2022, to the Child Tax Credit, we show that expanded Unemployment Insurance and stimulus payments played a larger role.
Increased WIC Eligibility and Birth Outcomes
Hyunkyu Ko
American Journal of Health Economics, Fall 2024, Pages 635–669
Abstract:
This paper provides quasi-experimental evidence on the effect of WIC, the Special Supplemental Nutrition Program for Women, Infants, and Children, on birth outcomes focusing on adjunctive eligibility, which allows Medicaid expansions to create variation in WIC eligibility. The results show that a 1 percentage point increase in WIC eligibility is associated with increase in average birth weight by 0.392 grams, which corresponds to an estimated treatment on the treated effect of 17.7 grams. WIC also reduces the incidence of small for gestational age by 0.019 percentage points, which corresponds to a treatment on the treated effect of 8.7 percent. I find little evidence that there is a strong causal link between WIC and low birth weight or preterm birth rates, for which many pieces of literature find a positive causation, while my findings on Medicaid indicate that increased Medicaid eligibility statistically significantly reduces the incidence of very low birth weight, preterm birth, and very preterm birth.
Monopsony Power and Poverty: The Consequences of Walmart Supercenter Openings
Lukas Lehner et al.
University of California Working Paper, September 2024
Abstract:
Prior research suggests that Walmart Supercenters exert substantial power over the low-wage labor market, though the consequences of Supercenter openings on household incomes and public finances are less clear. This study uses restricted-access Panel Study of Income Dynamics data from 1970 to 2019 to study how Walmart Supercenter openings affect poverty, tax liabilities, and receipt of income transfers. Using a stacked difference-in-differences approach, we find that the opening of a Supercenter leads to a 2 percentage point (16%) increase in poverty. This increase is channeled through declining annual earnings and persists for 10 years following the Supercenter's entry. Increases in poverty are particularly strong for younger and less-educated adults, and for adults with pre-treatment incomes below the national median. Moreover, Walmart Supercenter openings lead to a $200 (or 16%) per household per year increase in government income transfers received, and a $920 (or 5%) per household per year decrease in tax revenues.