IRP Discussion Paper Abstracts - 1995
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Full Text: DP 1078-95
During the last thirty years, the composition of white and black families in the United States has changed dramatically. In 1960, less than 10 percent of families with children were headed by a single mother, while in 1990 more than 20 percent of families with children were female-headed households. A large body of research has focused on the role of the U.S. welfare system, and in particular, the Aid to Families with Dependent Children (AFDC) program, in contributing to these dramatic changes in family structure. Most studies use cross-sectional data and identify the effect of welfare on female headship through interstate variation in the AFDC program. Recent research finds that controlling for state effects has a large impact on the estimated welfare effect. This paper examines why state effects matter for estimating the role of welfare in female headship decisions by examining the importance of individual effects and policy endogeneity. A natural explanation for why state effects matter is that the composition of the population across the states differs, and the composition is related to the generosity of the state's welfare program. If that is true, then controlling for individual effects should have the same result as controlling for state effects. Second, the endogeneity of AFDC policy is examined by including controls representing the determinants of state welfare generosity. The results show that after controlling for individual effects, there is no evidence that welfare contributes to increasing propensities to form female-headed households for either whites or blacks. Further, the results suggest that welfare-induced migration among blacks leads to an upward bias in the estimated welfare effect in previous studies.
Full Text: DP 1077-95
Recent research has identified situations in which instrumental variables (IV) estimators are severely biased and has suggested diagnostic tests to identify such situations. We suggest a number of alternative techniques for choosing a set of instruments that satisfy these tests from a universe of a priori plausible candidates, and we apply them to a study of the effects of adolescent childbearing on the educational attainment of young women. We find that substantive results are sensitive to instrument choice, and make two recommendations to the practical researcher: First, it is prudent to begin with a large set of potential instruments, when possible, and pare it down through formal testing rather than to rely on a minimal instrument set justified on a priori grounds. Second, the application of more restrictive tests of instrument validity and relevance can yield results very different from those based on less restrictive tests that produce a more inclusive set of instruments, and is the preferred, conservative approach when improper instrument choice can lead to biased estimates.
Full Text: DP 1076-95
This paper develops and evaluates a model of a mother's choice of kin-provided child care. Little is known about the choice of kin-provided child care, particularly within the context of intrafamily in-kind transfers. Despite this, kin-provided child care is extensively used, and its use affects family economic well-being. Using data from the National Longitudinal Survey of the Class of 1972 (NLS'72), this study shows that variables affecting maternal use of market-provided child care also affect use of kin-provided child care. The study also reveals that the effects of variables on the choice of kin-provided child care are misleading when the direction of other in-kind transfers between a mother and her extended family is ignored. Estimated coefficients change sign and size depending upon whether a mother was giving material assistance to members of her extended family.
Full Text: DP 1075-95
The economic status of single mothers with dependent children has recently been shown to vary greatly according to their living arrangements, a finding with implications for poverty policy and welfare reform. The economic and time resources of single mothers in various living arrangements were compared using the 1987 National Survey of Families and Households. I find that cohabitation is significantly related to increased income adequacy and lesser receipt of public assistance for white mothers, but not for black mothers. Living in the parents' home is significantly related to a reduced likelihood of receipt of public assistance for both white and black single mothers, but living with parents is related to lesser time demands in household work only for white single mothers. Differences in resource levels may be related to the finding that, among those living in the parental household, a large majority of white mothers live with two parents, while a majority of black mothers live with one parent.
Full Text: DP 1074-95
This paper documents the declining relationship between low hourly wages and low household income over the last half-century and how this has reduced the share of minimum wage workers who live in poor households. It then compares recent and prospective increases in the earned income tax credit (EITC) and the minimum wage as methods of increasing the labor earnings of poor workers. Data from the Current Population Survey (CPS) are used to simulate the effects of both programs. Increases in the EITC between 1989 and 1992 delivered a much larger proportion of a given dollar of benefits to the poor than did increases in the minimum wage from $3.35 to $4.25. Scheduled increases in the EITC through 1996 will also do far more for the working poor than raising the minimum wage.
Full Text: DP 1073-95
The Disability Insurance Program (DI) and the Supplemental Security Income Program (SSI) are the primary cash transfer programs for the disabled. We compare the potential outcomes of using financial inducements as a means to increase the work incentives to those who are on DI, and an earnings replacement program, or SSI, a means-tested transfer program not tied to previous work experience. Our assessment of the existing research on work incentives in programs for the nondisabled leads us to urge caution in relying on simple financial inducements as means of work-incentive reform without further, concrete evidence of their effectiveness.
Full Text: DP 1072-95
Although teen childbearing connotes negative outcomes for the mothers, we know little about the effects on the children of being born to a teen mother. We explore some of the possible health and medical care consequences associated with having a teenage mother. The 1987 National Medical Expenditure Survey (NMES), a nationally representative data set, is the data source we use to examine the consequences teen parenting might have on additional health and medical care costs for the children. We find that the children of teenage mothers tend to be in poorer health than the children of older mothers, and that a greater proportion of their medical expenses are borne by other members of society.
Full Text: DP 1071-95
Since World War II, the average age at which women experience their first birth has drifted up, but since 1986 there has been a resurgence of births to teenagers. Just as early fertility appears to adversely affect the life chances of the teen mother, it may also have negative effects on her children. We hypothesize that when the children of teen mothers are young adults, they will tend to have lower education, and will be more likely to be economically inactive, to have children when they are teens, and to have children out of wedlock when they are teens. In this paper, we present several models designed to reveal the impact that being born to a teenage mother has on children's chances for success as young adults. Our findings indicate that the children of mothers who first gave birth as teens are adversely affected as young adults.
Full Text: DP 1070-95
In an effort to make Wisconsin's child support cases more equitable and up-to-date, child support staff reviewed "old" child support orders in thirteen of the state's seventy-two counties. (Reviewing old child support orders is now mandatory under the provisions of the Family Support Act of 1988.) Of the reviewed cases, only 21 percent were revised. Primary reasons for non-revision were the economic circumstances of the noncustodial parent (among welfare cases) and a lack of permission by the custodial parent to proceed (among non-welfare cases). Revised orders increased substantially, an average of $116/month (77 percent). An alternative method of keeping orders current is to express them as a percentage of the noncustodial parent's income; these orders are kept up-to-date automatically and are associated with large increases in collections.
Full Text: DP 1069-95
This report uses data from the authors' National Survey of Economic Expectations to describe how, during 1994, working Americans with health insurance perceived the risk of near-term deterioration in their economic status. Perceived economic vulnerability is measured through responses to questions eliciting subjective probabilities of loss of health insurance, of burglary, and of job loss. We find that respondents tend to rank burglary as the most likely of the three events, followed by job loss, and then loss of health insurance. The perceived risk of crime victimization is much higher than the realized rate of victimization. Male and female respondents have similar risk perceptions but blacks have much greater perceived vulnerability than do whites.
Full Text: DP 1068-95
We investigate the extent and implications of cohabitation and marriage among U.S. welfare recipients. An analysis of four data sets (the CPS, NSFH, PSID, and NLSY) shows significant numbers of cohabitors among recipients of AFDC. An even more surprising finding is the large number of married women on AFDC. We also report the results of a telephone survey of state AFDC agencies conducted to determine state rules governing cohabitation and marriage. The survey results indicate that, in a number of respects, cohabitation is encouraged by the AFDC rules. Finally, we conduct a brief analysis of the impact of AFDC rules on cohabitation, marriage, and headship, and find weak evidence in support of incentives to cohabit.
Full Text: DP 1067-95
This paper examines the change in the earnings distribution and in the earnings distribution conditional on years of schooling and experience for white male full-time, year-round workers in the United States from 1967 to 1992. Ginther uses nonparametric kernel estimators to examine changes in the unconditional and conditional earnings distributions and to estimate measures of conditional earnings inequality. Ginther compares estimates from parametric wage equations to nonparametric estimates and finds that parametric estimates are biased: earnings inequality did not change in equal proportions within cohorts and experience groups. Instead, inequality increased the most among workers with 10 and 12 years of schooling at all experience levels and among workers with both 16 years of schooling and less than 15 years experience. Inequality decreased among people with graduate levels of schooling. Controlled for levels of schooling and experience, real wages have declined drastically for all workers except those with more than 16 years of schooling or more than 25 years experience. Groups experiencing the largest increase in earnings inequality are also those with the largest decline in real wages.
Full Text: DP 1066-95
The experience of Wisconsin is commonly cited as evidence of the capability of states for reforming welfare. Wisconsin's welfare caseload declined 22.5 percent between December 1986 and December 1994. This paper argues that the decline is primarily associated with restriction of eligibility and benefits, a strong state economy, and large expenditures on welfare-to-work programs encouraged by an exceptional fiscal bargain with the federal government. Continued reduction of welfare utiliztion is jeopardized by proposed changes in federal cost-sharing, a substantial state deficit, and the growing share of the caseload accounted for by residents of Milwaukee. The special circumstances enjoyed by Wisconsin are unlikely to be duplicated elsewhere. Other states and the federal government should not assume that expanded state discretion will produce comparable gains unless accompanied by major outlays for employment and training programs, reductions in benefits, and tightening of eligibility requirements. The first policy is expensive to taxpayers; the second and third harm recipients.
Full Text: DP 1065-95
Most studies of the benefits of education focus on market outcomes, particularly labor market returns. But the rewards of education are not limited to success at finding a job and earning money; schooling also affects nonmarket outcomes, such as one's health and the cognitive development of one's children. The authors discuss several nonmarket outcomes of education that have been confirmed by researchers and estimate the value that an additional year of schooling has on some of those outcomes.
Full Text: DP 1064-95
The poverty of Appalachia is not the product of modernization. Nor is it a unique phenomenon. An examination of the history of farming in Beech Creek, Kentucky, reveals that this community, which was prosperous in 1860, owed its fall into poverty to a number of factors that had impoverished other regions: the high rate of population growth among the families living in the area, the division and re-division of the limited land to accommodate the new generations of families, the need to use woodland for agriculture before reforestation succeeded in restoring the old soil to its original productivity, and slow economic growth resulting from the emphasis on subsistence rather than commercial agriculture. The same pattern had occurred in New England in the eighteenth century. What was unique in Appalachia was that subsistence farming lasted so long, owing to growing isolation from the rest of the country as the area was bypassed in the construction of modern means of transportation.
Full Text: DP 1063-95
In an effort to standardize the calculation of monthly child support awards, the federal government requires states to use preestablished formulas to determine the amount of awards. However, because of human error, differences in the experience and training of the officials making the calculations, and the extent to which computers are used to calculate the awards, the formulas do not always yield the same result. In fact, the discrepancy between the amount calculated by an individual child support official and the approved amount as calculated by the state in which that official works can be quite large, on the order of several hundred dollars. Adopting simpler formulas will reduce errors; this should be a priority even if child support officials use computers to calculate award amounts (computers can reduce errors but will not eliminate them, particularly in the case of complex formulas). Efforts to further the training and education of personnel who calculate awards would also help, and child support offices should revise their formulas to cover high-income cases.
Full Text: DP 1062-95
Using detailed panel data on school, work, and family formation history of youth (i.e., NLSY 1979-1991), we examine the dynamic process of labor market transitions women make during young adulthood. Transitions between the states of the labor force (i.e., employment, unemployment, and out of the labor force) are analyzed using multistate life tables, in which labor market and family transitions are estimated simultaneously. The age-pattern, life-cycle variation, and racial differences in employment and nonemployment transitions are the main interests of this study. We find that black women in the aggregate are less likely to be employed (or in the labor force) and more likely to be nonemployed than white women during early adulthood (i.e., at ages 16-34). With first childbirth controlled, a higher proportion of black women than white women are in the labor force during the same period, as past studies have shown. But, we find that the proportion employed is actually lower among blacks than among whites because a higher proportion of blacks are unemployed. Even though the racial differential in employment decreases with age among women with more than a high school education, it persists among women with a high school education or less. By estimating the conditional probabilities of transitions between states of the labor force, this study shows that the major component of the racial differential in employment (or in nonemployment) is in the process of entering employment either from the unemployment or the out-of-the-labor-force state: black women, if in the labor force, are less likely to be employed and more likely to withdraw from the labor force, if unemployed, than their white counterparts. As a summary measure, our life table analysis shows that black women spend considerably more time nonemployed and less time employed than white women over the early life course.
Full Text: DP 1061-95
The importance of social programs to a diverse population creates a legitimate concern that the findings of evaluations be widely credible. The weaker are the assumptions imposed, the more widely credible are the findings. The classical argument for random assignment of treatments is viewed by many as enabling evaluation under weak assumptions, and has generated much interest in the conduct of experiments. But the classical argument does impose assumptions, and there often is good reason to doubt their realism. Some researchers, finding the classical assumptions implausible, impose other assumptions strong enough to identify treatment effects of interest. In contrast, the recent literature examined in this article explores the inferences that may be drawn from experimental data under assumptions weak enough to yield widely credible findings. This literature has two branches. One seeks out notions of treatment effect that are identified when the experimental data are combined with weak assumptions. The canonical finding is that the average treatment effect within some context-specific subpopulation is identified. The other branch specifies a population of a priori interest and seeks to learn about treatment effects in this population. Here the canonical finding is a bound on average treatment effects. The various approaches to the analysis of experiments are complementary from a mathematical perspective, but in tension as guides to evaluation practice. The reader of an evaluation reporting that some social program "works" or has "positive impact" should be careful to ascertain what treatment effect has been estimated and under what assumptions.
Full Text: DP 1060-95
This paper brings together figures on recent trends in the labor market activity and wages of working-age men in the United States over the 1967-1992 period. The data, which come from Current Population Surveys, reveal several important developments. Year-long joblessness, the percentage of men failing to participate in the labor force, and the proportion who were unemployed rose throughout the period. Part-time employment as a percentage of all forms of employment was also higher at the end of the period than at the beginning, and the average hours worked by full-time workers increased slightly. Finally, median and mean wages fell. None of the trends was due to changes in the racial, educational, and age composition of the male work force; in fact, if the racial/educational/age composition had remained the same over the period, labor market activity would have declined even further.
Full Text: DP 1059-95
The percentage of working-age men in the United States who were fully active in the labor market decreased over the 1975-1992 period ("fully active" means working 2080 hours in a year). Similarly, the extent to which men were less than fully active increased. When one considers the number of hours by which men fell short of the 2080 norm in 1992, it was as if 20 percent of them did not work at all in that year, up from 18 percent in 1975. However, because the least-productive workers were the ones most likely to be less than fully active and the most-productive were the ones least likely to be less than fully active, total productivity-weighted work hours did not fall by this large an amount. If men failed to work 2080 hours in a year, most likely it was because they did not work at all; men most often did not work at all because they could find no jobs. Data were from Current Population Surveys.
Full Text: DP 1058-95
This paper reports the results of a survey of state AFDC rules regarding the treatment of unrelated cohabitors in households containing AFDC units. We examine state treatment of cash and in- kind contributions by cohabitors and find that the AFDC grant is usually not affected if the cohabitor makes in-kind contributions toward household food or shelter expenses. However, the grant generally is reduced if the cohabitor contributes cash to the AFDC unit unless the cash is for shared household expenses. In addition, a few states have specific policies toward cohabitors that are not based upon initial evidence of cohabitor contributions.
Full Text: DP 1057-95
Earnings and employment deteriorated the most for young, less- educated, and/or black males in the 1980s. The most severe deterioration for blacks occurred in the North-Central regions. The causes of such regional and demographic variation in outcomes include a greater severity of demand shifts away from these groups and areas, as well as the greater relative impacts of such shifts on the earnings and employment of these demographic groups. Relative supply shifts across areas also contributed somewhat to the observed employment outcomes. There is some evidence of short-run population shifts across areas and groups that at least partially offset the negative demand changes described above. But younger and less-educated workers, especially among blacks, showed substantially lower population adjustments and migration in this time period in response to these demand shifts. The educational improvements of blacks during this decade also lagged behind. These limited supply responses apparently contributed somewhat to the severity of the demand effects on the employment and earnings of these groups during the 1980s. The data used here are from the Public Use Samples of the 1980 and 1990 Censuses and the National Longitudinal Survey of Youth.
Full Text: DP 1056-95
Compared to racial segregation, economic segregation has received little attention in recent empirical literature. Yet a heated debate has arisen concerning Wilson's hypothesis (1987) that increasing economic segregation plays a role in the formation of urban ghettos. This paper presents a methodological critique of the measure of economic segregation used by Massey and Eggers (1990) and finds that it confounds changes in the income distribution with spatial changes. I develop a "pure" measure of economic segregation and present findings on all U.S. metropolitan areas from 1970 to 1990. There have been steady increases in economic segregation for whites, blacks, and Hispanics in both the 1970s and 1980s, but the increases have been particularly large and widespread for blacks and Hispanics in the 1980s. The causes of these changes are explored in a reduced form, fixed-effects model. Social distance theory and structural economic transformations do affect economic segregation, but the large increases in economic segregation among minorities in the 1980s cannot be fully explained within the model. These rapid increases in economic segregation, especially in the context of recent, albeit small, declines in racial segregation, have important implications for urban policy, poverty policy, and the stability of urban communities.
Full Text: DP 1055-95
This study analyzes short-run AFDC recidivism among mother- only families. Findings suggest that a sizable minority of former AFDC recipients return to AFDC rapidly. Those most likely to return to AFDC are those switching jobs, those moving to publichousing, those adding children, and those not getting regular child support payments. The results also suggest that wages are better predictors of staying off AFDC than are alternative measures of success in the labor market.
Full Text: DP 1054-95
Research on poverty is highly fragmented and technical, the work mostly of specialists who analyze data using statistical methods. However, policymakers and researchers also need to understand poverty in a broader, more integrated way. How does one construct such an overview? No definite methodology can be suggested, because the literature is not all commensurable or quantified, and even statistical research involves judgments. Interpreters, like policy analysts, should appeal to multiple and reliable sources, prefer impartial research, cite the full range of findings, consider program experience as well as academic studies, and take a position on the psychology of poverty.
Full Text: DP 1053-95
Americans are again concerned about welfare - Aid to Families with Dependent Children (AFDC) - and politicians are again proposing to reform the system. According to the author, at issue is not the cost of AFDC, but what the money is supposedly being spent for: to "reward" young women without educations or skills for bearing children out of wedlock; the subtext is that such women are inner- city, substance-abusing blacks spawning a criminal class. But this supposition is based on false notions of the welfare population, the author argues. AFDC recipients are a diverse group; most are working or trying to work, although the low skills and poor educations of many often preclude work as a reasonable option; and long-term welfare receipt is the exception, not the rule. The current reform proposals are doomed to fail since they are based on the same old misguided assumptions as to the causes of and cures for welfare dependency - reforming the recipient instead of improving the labor market. The author concludes that the current reform frenzy is another exercise in symbolic politics, affirming mainstream norms by stigmatizing the poor.