IRP Discussion Paper Abstracts - 1996

Notes: Abstracts are plain text. Downloadable papers are in Adobe Acrobat (.pdf) format.
1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009
2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017
Trends in AFDC Participation Rates: The Implications for Welfare Reform
Gary Sandefur and Tom Wells

Full Text: DP 1116-96

Congress justified the recent reform of federal welfare policy in part by citing the increase in the AFDC caseload since the late 1960s. The caseload, i.e., the number of families using AFDC, is determined by the number of families eligible to participate and by the proportion of these families who use the program. Yet the debate over reforming welfare rarely paid attention to the latter-the participation rates among female heads of families. While the number of cases changed little during the early to mid-1980s, the percentage of families with single female heads who used AFDC declined. During the late 1980s and early 1990s, both caseloads and participation rates increased. This paper documents the changes in participation rates since the mid-1980s, racial and ethnic differences in participation rates, and factors that might be associated with these changes. The only major trend that consistently parallels the changes in participation rates is the trend in unemployment. Existing data do not permit us to conclude that unemployment is the major determinant of participation rates. If unemployment drives participation rates, however, the recent changes in welfare legislation may create serious problems for many female heads of families in periods of high unemployment.

Employer Demand, AFDC Recipients, and Labor Market Policy
Harry J. Holzer

Full Text: DP 1115-96

This paper discusses the potential labor market prospects of AFDC recipients who will be required to work under the new welfare legislation. Various characteristics of available low-skill jobs are compared with those of long-term AFDC recipients, and more general evidence on the labor market experiences of welfare recipients is reviewed. From these data, the potential availability of employment and wage levels that recipients will face in the labor market is inferred. The data suggest that job availability for long-term recipients will be quite limited, especially in the short run; many will likely be plagued by lengthy durations of nonemployment, as well as high job turnover and low wages and benefits when they do work. The implications of these findings for labor market policy are then discussed.

Predicting Hunger and Overcrowding: How Much Difference Does Income Make?
Jane Mauldon

Full Text: DP 1114-96

A survey of AFDC recipients in California shows that income, even when adjusted for household need and augmented by the food stamp grant, poorly predicts hunger or overcrowding among respondents. Families with teenage boys report hunger much more often than their incomes would predict, as do families whose finances have recently deteriorated. Families seem to cut back on food consumption before cutting back on housing.

One-third of families with male teenagers and nearly one-fifth of families with preschoolers were hungry "sometimes" or "often." One-third of households had more than two people per bedroom. These conditions cannot be inferred accurately from data about income but they can be measured directly using surveys.

Are Affirmative Action Hires Less Qualified? Evidence from Employer-Employee Data on New Hires
Harry Holzer and David Neumark

Full Text: DP 1113-96

In this paper we use micro-level data on employers and employees to investigate whether Affirmative Action procedures lead firms to hire minority or female employees who are less qualified than workers who might otherwise be hired. Our measures of qualifications include the educational attainment of the workers hired (both absolute and relative to job requirements), skill requirements of the job into which they are hired, and a variety of outcome measures that are presumably related to worker performance on the job. The analysis is based on a representative sample of over 3,200 employers in four major metropolitan areas in the United States. Our results show some evidence of lower educational qualifications among blacks and Hispanics hired under Affirmative Action, but not among white women. Further, our results show little evidence of substantially weaker job performance among most groups of minority and female Affirmative Action hires.

"A man without a job is a dead man": The Meaning of Work and Welfare in the Lives of Young Men
Kathleen A. Kost

Full Text: DP 1112-96

Little is known about the use of welfare by young men; most research and debate have concentrated on the use of welfare by families headed by single women. The present research includes young men in the debate by examining the personal characteristics, backgrounds, and reasons for use of young men who participated in a General Assistance (GA) program. It explores the events that precipated their use, why they exited, and the barriers they faced in obtaining employment. Data are from qualitative interviews of 20 young men who resided in Madison, Wisconsin. A majority of respondents came from disadvantaged backgrounds, and more than half had been raised in a single-parent family. Fourteen of the 20 respondents had some involvement in the criminal justice system while they were adolescents; thirteen were fathers, only one of whom was married to the mother; eleven had been homeless, nine had a parent who had received AFDC; and six had neither a high school diploma nor a GED. Findings suggest that these young men use GA as a type of unemployment insurance between jobs. The average length of use for men in this sample was 7.5 months, and about half the men used GA more than once. This research makes clear the importance of assistance in improving the level of human capital and locating and retaining employment for poor men and suggests areas for future research.

Exploring the Effects of Childhood Family Structure on Teenage and Young Adult Labor Force Participation
Steven Garasky

Full Text: DP 1111-96

In examining teenage and young adult employment, this study has three objectives. It seeks to throw light on reasons that some teenagers work and some do not. It explores the effect teenage labor force participation has on teenage educational attainment. Finally, it considers the longer-term effects of early employment on young adult work and wages. Four cross-sectional analyses are performed separately for male and female cohorts of original National Longitudinal Survey of Youth (NLSY) respondents who were aged 14 through 16 at the first interview in 1979. These analyses take the fullest advantage of the longitudinal nature of the data, using information from every year available, 1979 through 1993. Childhood family structure is found to have little impact on teenage employment and timely high school graduation. However, there is evidence that teenage employment has positive effects on high school graduation and later labor force participation.

Trends in Black-White Test-Score Differentials
Robert M. Hauser and Min-Hsiung Huang

Full Text: DP 1110-96

Until the 1970s, there were few signs of change in the historic difference of one standard deviation between average ability or achievement test scores of blacks and whites in the United States. From about 1970 to the mid- to late 1980s, there was a substantial convergence of the average achievement test scores of black and white youth; however, from the mid- to late 1980s to 1992, test scores began to diverge again. Although we place the greatest weight on data from the National Assessment of Educational Progress (NAEP), the convergence also appeared in other test series. Herrnstein and Murray's highly visible work, The Bell Curve, stands almost alone in minimizing the importance of the convergent trend. We also find a longer-term trend of convergence between the verbal abilities of blacks and whites in data from the General Social Survey (GSS), which covers adult cohorts born since 1909.

Did Recent Medicaid Reforms Cause the Caseload Explosion in the Food Stamp Program?
Aaron S. Yelowitz

Full Text: DP 1109-96

I examine whether changes in Medicaid eligibility for young children can help explain the caseload growth in the Food Stamp program between 1987 and 1995. Medicaid may increase food stamp participation through increased awareness about other welfare benefits. It could also reduce earnings through perverse labor supply incentives, thereby increasing food stamp participation.

The Medicaid expansions enacted during the 1980s offer a unique opportunity to examine empirically Medicaid's interaction with the Food Stamp program because they conditioned eligibility on the age of the child. Households with ineligible children (based on the child's age) serve as a control group to isolate Medicaid's effect. They help to eliminate many other plausible explanations for the rise in food stamp participation, including economic fluctuations at the state and national levels.

I use the Survey of Income and Program Participation (SIPP) to tackle this question. It shows evidence that expanding Medicaid eligibility increased food stamp participation. The effect is quite modest, however. The expansions explain less than 10 percent of the growth in food stamps, substantially smaller than previous estimates. Moreover, its effect on food stamp participation comes entirely through increased program awareness, rather than from any change in labor supply.

The Impact of School Resources on Women's Earnings and Educational Attainment: Findings from the National Longitudinal Survey of Young Women
Julian R. Betts

Full Text: DP 1108-96

This research measures the impact of high school resources on women's educational attainment and earnings. No link emerges between education and school resources, whether measured by the pupil-teacher ratio, spending per pupil, teachers' starting salaries, or books per student. For white women, no significant connection between school resources and wages is found. But school inputs are in several cases significantly and positively related to black women's wages. Wage elasticities with respect to school inputs are uniformly larger for black women. Finally, the impact of school resources on earnings remains constant or in some cases depreciates as workers grow older.

Factors Contributing to Household Food Insecurity in a Rural Upstate New York County
Christine M. Olson

Full Text: DP 1107-96

In order to identify factors that contribute to household food insecurity in a rural county in upstate New York, we conducted two personal interviews with 193 women who were between the ages of 20 and 40 years, had less than 16 years of education, and had children living at home. Data were collected on sociodemographic characteristics, risk factors for food insecurity, food program participation, and the Radimer/Cornell hunger and food insecurity measures; in addition, each household's food supplies were inventoried. Regression analyses and tree-based partitioning were used to identify the risk factors. The variables significantly (p < 0.05) contributing to food insecurity were being a single parent, lack of savings, larger household size, having unexpected expenses, adding $50 or more to food stamps to purchase sufficient food, and having low food expenditures. The variables contributing to low levels of household food supplies were low educational level, low food expenditures, not vegetable gardening, and not receiving free milk, eggs, and meat.

The Effect of Neighborhood Characteristics on Young Adult Outcomes: Alternative Estimates
Robert D. Plotnick and Saul D. Hoffman

Full Text: DP 1106-96

We estimate a set of alternative models to examine the effect of neighborhood characteristics on outcomes among young adult women. The models are motivated by a concern that standard estimates of neighborhood effects may in part reflect the characteristics of families that reside in those neighborhoods. In addition to a "standard" model that includes controls for family background, we estimate fixed-effect models that also control for unobservable family characteristics that may affect young adult outcomes. To do this, we use a sample of sisters drawn from the Panel Study of Income Dynamics. In models that control for family background, we find evidence of neighborhood effects consistent with other recent work. In the fixed-effect models, however, there are no statistically significant effects that are consistent with standard hypotheses about neighborhood effects. The findings from this exploratory study suggest that one should be cautious about accepting findings of significant neighborhood effects derived from models that do not account for the possible selection of neighborhood.

Perceptions of Economic Insecurity: Evidence from the Survey of Economic Expectations
Jeff Dominitz and Charles F. Manski

Full Text: DP 1105-96

We have recently initiated the Survey of Economic Expectations (SEE) in an effort to learn how Americans perceive their near-term futures. This paper use SEE data on over two thousand labor force participants interviewed in 1994 and 1995 to describe how Americans in the labor force perceive the risk of near-term economic misfortune. We measure economic insecurity through responses to questions eliciting subjective probabilities of three events in the year ahead: absence of health insurance, victimization by burglary, and job loss. With item response rates exceeding 98 percent, respondents clearly are willing to answer the expectations questions and they appear to do so in a meaningful way. Using the responses to classify individuals as relatively secure, relatively insecure, and highly insecure, we find that respondents with a high risk of one adverse outcome tend also to perceive high risks of the other outcomes. Economic insecurity tends to decline with age and with schooling. Black respondents perceive much greater insecurity than do whites, especially among males. Within the period 1994-1995, we find some time-series variation in insecurity but no clear trends. We find that expectations and realizations of health insurance coverage and of job loss tend to match up quite closely, but respondents substantially overpredict the risk of burglary.

Local Labor Markets and Welfare Spells: Do Demand Conditions Matter?
Hilary Williamson Hoynes

Full Text: DP 1104-96

This paper examines the role of local labor markets in determining how long families receive benefits from the Aid to Families with Dependent Children (AFDC) program. Given the current policy emphasis on devolution and reducing the AFDC caseload through employment, understanding the role of local labor demand is important. The study uses a unique data set, based on administrative data, that has detailed information on welfare spells for over 100,000 AFDC cases. The empirical work is based on estimates of a duration model where the hazard rate is a function of demographic characteristics, local labor market variables, neighborhood characteristics, county fixed effects, and time effects. Several alternative measures of local labor market conditions are used; 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. On average, a typical employment fluctuation over the business cycle, if permanent, would lead to an 8 10 percent reduction in the AFDC caseload. Typical changes in real quarterly earnings generate somewhat smaller effects. The combined effect of these two changes, if permanent, would lead to sizeable reductions in the caseload, on the order of 15 percent. The estimated labor market effects are robust to including county-level fixed effects and time effects. AFDC-UP participants, blacks, and residents of urban areas are more sensitive to changes in economic conditions while teen parents and refugee groups are found to be much less sensitive to changes in local labor market conditions.

Work, Welfare, and Family Structure: A Review of the Evidence
Hilary Williamson Hoynes

Full Text: DP 1103-96

Support for reforming the welfare system in the United States is widespread, as evidenced by legislative action by many states and, most recently, the federal government. Although part of the interest in reform is fiscally motivated, interest also exists in making significant changes to address two prominent criticisms of the current system of public assistance in the United States: (1) the system has significant, adverse, work incentives; and (2) the system discourages the formation of two-parent families and is responsible in major part for the high and rising rates of female headship and out-of-wedlock births. This paper uses the available empirical evidence to explore the validity of these criticisms and to evaluate the impact of various reforms. The programs examined include Aid to Families with Dependent Children, Food Stamps, and Medicaid. The paper relies on evidence based on three sources of variation in welfare policy: cross-state variation, over-time variation, and demonstration projects at the state level. The conclusions are that current reforms aimed at reducing female headship and nonmarital births, such as "family caps," eliminating benefits for teens, and equal treatment of one- and two-parent families, are unlikely to generate large effects. Changes in implicit tax rates and benefit formulas may increase work among current recipients, but overall work effort may not be affected. These predictions should be accompanied by a word of caution: many of the proposed changes have never been implemented at the state or federal level and require out-of-sample predictions. Current state experimentation may help fill this gap.

Using the Medicare Buy-In Program to Estimate the Effect of Medicaid on SSI Participation
Aaron S. Yelowitz

Full Text: DP 1102-96

This paper assesses the importance of receiving public health insurance through the Medicaid program on participation in Supplemental Security Income (SSI) for the elderly. The implementation of the Qualified Medicare Beneficiary (QMB) program offered a substitute for the Medicaid coverage, and expanded health insurance eligibility to a higher income level than SSI. Although the QMB program offered an alternative health insurance source (which may reduce SSI participation), its introduction may have increased awareness about the SSI program (and hence, participation). I find that the net effect was to reduce SSI participation. The effects were particularly strong for African Americans and for those with less than a high school diploma. Roughly half of the QMB participants were previously covered by SSI and Medicaid. The calculations suggest that the QMB program was not as expensive as it might first appear because of reductions in SSI expenditure.

Life after Welfare: The Economic Well-Being of Women and Children Following an Exit from AFDC
Daniel R. Meyer and Maria Cancian

Full Text: DP 1101-96

Much previous research has focused on the length of welfare spells and returns to welfare following an exit. Few quantitative studies have looked at broader indicators of the economic well-being of those who have exited AFDC. In this paper we use data from the National Longitudinal Survey of Youth (NSLY) to trace welfare use, poverty status, and primary sources of income in the five years following an exit from welfare. We find that while there is a trend toward improved economic status over time, 40 percent of women remain poor five years after exit. Women with more advantaged family backgrounds, those with fewer children, or with more education at exit are more likely to consistently escape poverty. Median income increases over the first five years from about $10,500 to about $15,000 (1992 dollars). Own earnings are the most prevalent income source, followed by spouse's earnings, and mean-tested transfers.

The Intergenerational Correlation in AFDC Participation: Welfare Trap or Poverty Trap?
Phillip B. Levine and David J. Zimmerman

Full Text: DP 1100-96

Several recent studies have shown that daughters whose mothers have participated in the welfare program Aid to Families with Dependent Children (AFDC), are themselves more likely to participate in AFDC when they head their own household. Other studies have shown that the earnings of parents and their children are highly correlated across generations. This suggests that any variable correlated with income such as AFDC participation will also be correlated across generations.

This paper uses data from the original and youth cohorts of the National Longitudinal Surveys to investigate the question of whether the link in mother-daughter welfare participation is a causal relationship, or whether it can be explained by the expected intergenerational correlation in earnings. Several reduced-form probit equations are estimated, and attention is directed to the potential endogeneity of key explanatory variables. The empirical findings suggest that much of the observed correlation in AFDC participation across generations can be explained by the intergenerational correlation of income and other family characteristics.

Determinants of Welfare Entry and Exit by Young Women
Marieka Klawitter, Robert Plotnick, and Mark Edwards

Full Text: DP 1099-96

Using data from the youngest cohorts of women in the National Longitudinal Survey of Youth, this study constructs AFDC histories starting at age 15. Most young women go on AFDC for the first time between ages 18 and 25 and do so in the first few years after the birth of their first baby. We use these histories to estimate models of the determinants of initial use of AFDC and of the rate of exit from the first AFDC spell. The models show little evidence that welfare benefits affect the likelihood and timing of AFDC use, except that higher Medicaid benefits are associated with slower rates of exit from an initial AFDC spell. Parental welfare receipt, the home educational environment, family structure, academic achievement, attitudes toward school, and race are significantly related to the likelihood of participating in AFDC and the rate of entry and exit.

An Empirical Analysis of the Welfare Magnet Debate Using the NLSY
Phillip B. Levine and David J. Zimmerman

Full Text: DP 1098-96

This paper examines the extent to which differences in welfare generosity across states lead to interstate migration. Using microdata from the National Longitudinal Survey of Youth between 1979 and 1992, we employ a quasi-experimental design that utilizes the categorical eligibility of the welfare system. The "treatment" group consists of all those in the survey who appear eligible to participate in Aid to Families with Dependent Children. The "control" group contains those who are poor but ineligible for other reasons. The pattern of cross-state moves among poor single women with children who are likely to be eligible for benefits (treatment-group members) is compared to the pattern among other poor households. We find little evidence indicating that welfare-induced migration is a widespread phenomenon.

Exploring the Stigma of Food Stamps
Edward J. Bird

Full Text: DP 1097-96

This paper reports on theoretical research into the effect of stigma and social norms on policy outcomes of the Food Stamp program, in particular the effect on the caseload. As a general rule, it is impossible to predict whether norms will amplify or dampen the response of caseloads to any given policy intervention. Sometimes they have an effect, sometimes they do not. Much depends on whether the norms themselves change very much in response to policy changes.

Social feedback (each norm violation encourages more violations) makes policy predictions uncertain. It can translate very small shocks into very large changes in the caseload. Norm systems can collapse abruptly. Norms can alleviate administrative problems involving targeting, since norms can define "true need" in a social sense and allow all of the truly needy to claim benefits. Eligible nonparticipants are viewed as "not needy" in the social sense, though they may be needy according to objective criteria. Norms may also lessen a program's incentive effects (against work, for example). Norms may exacerbate administrative problems involving resource availability. To the extent that program eligibility differs from socially defined need, the program will be unpopular. Norms also add considerable uncertainty to the environment of policy planning and execution.

Policymakers who hope to reduce the influence of stigma on program resources and administration should consider localizing program eligibility rules, so that the rules correspond more closely to social definitions of need. Intense, broad-based local outreach efforts may also reduce stigma's power.

Are Welfare Employment Programs Effective?
Lawrence M. Mead

Full Text: DP 1096-96

Employment programs meant to place welfare adults in work or training became an important part of Aid to Families with Dependent Children starting in the 1980s. These programs are effective if one means that they have positive impacts in evaluations, less so if one expects them to make a large and visible change in the welfare problem. In programs evaluated by the Manpower Demonstration Research Corporation, impacts on employment, earnings, and dependency are small in absolute terms but somewhat larger as a percentage of the control group mean. Impacts are understated in some studies because randomization occurred only after enrollment in the work program or because control group members had access to equivalent services. Results are also depressed by the failure of many experimentals to participate in the tested program. Programs raise the activity of experimentals in work-related activities much more than they raise earnings or employment. Effects on dependency are understated because evaluations do not capture deterrence effects. The sharp decline in AFDC in Wisconsin in recent years suggests the power of work requirements to drive the rolls down.

Extended Early Childhood Intervention and School Achievement: Age 13 Findings from the Chicago Longitudinal Study
Arthur J. Reynolds and Judy A. Temple

Full Text: DP 1095-96

We evaluated the effects of participation in an extended program of compensatory education for a large sample of inner-city black children up to the seventh grade. The intervention is the Chicago Child-Parent Center and Expansion Program. Groups included 426 children who participated in the program from preschool to grades 2 or 3 and 133 school-stable children whose participation ceased in kindergarten. After taking into account initial differences in both the level and the growth rate of achievement, frequency of school mobility after the program, and sample selection bias, program participation for two or three years after preschool and kindergarten is positively associated with reading and math achievement in grade 7 and negatively associated with cumulative grade retention four years after the end of the program. Study findings provide rare longitudinal evidence from an established program concerning the effects of extending compensatory education into the primary grades.

Transmitting Values about Education: A Comparison of Black Teen Mothers and Their Nonparent Peers
Naomi B. Farber and Roberta R. Iversen

Full Text: DP 1094-96

Central to the debate about why some poor people remain poor is the enduring question of what role values play in behavior patterns as observed in chronically impoverished families and communities. Young black women who grow up in impoverished families in urban ghettos face some similar challenges to becoming competent adults who function independently in the wider society. Not all young women who fit this demographic category become young or single mothers who depend on AFDC; some who do also complete levels of education that lead to economic self-sufficiency. In order to explore the question about values and their significance among the urban poor, we examine the life histories of 50 young black women from inner-city Milwaukee, looking in particular at values and behaviors as they relate to educational competence. We analyze the perceived family values about education, the ways in which the young women's families acted on those stated values with the intention of influencing their daughters' educational outcomes, and how these values and transmission processes are related to the young women's educational attainment.

Welfare Policy: The Administrative Frontier
Lawrence M. Mead

Full Text: DP 1093-96

The process of national welfare reform has been overtaken by local reform as states implement experimental programs under federal waivers. Most of these initiatives attempt to enforce work or otherwise control the lives of the dependent in return for support. Research, which traditionally stressed the social and economic aspects of welfare or poverty, must be reoriented to address the administrative issues raised by the emerging paternalism. A combination of field interviewing and analyses of reporting data can track implementation and connect program operations to outcomes. Such research assesses program performance less surely than experimental trials do but is more useful to operators and more relevant to current program goals. The frontiers of welfare research, like welfare policy, are institutional.

The Impact of Alcohol and Drug Use on Employment: A Labor Market Study Using the National Longitudinal Survey of Youth
Richard R. Bryant, Ananda Jayawardhana V. A. Samaranayake, Allen Wilhite

Full Text: DP 1092-96

The purpose of this study was, first, to estimate of the impact of alcohol and drug use on the employment status of men and women, and second, to examine whether a history of past use, as opposed to current use, adversely affects the propensity to be employed.

Using data from the National Longitudinal Survey of Youth we conducted a cross-sectional and a longitudinal analysis with logistic regression estimation to model the probability that a person was employed in 1992. In addition to usual regressors, interactions between substance use measures, between substance use measures and human capital variables, and between substance use measures and race dummies were included in the equation. The longitudinal analysis utilized a conditional likelihood method based on employment data in 1992 and 1988 and included the difference between 1992 regressors and their 1988 counterparts. A comparison was made between the prediction accuracy of the logit choice model, linear discriminant analysis, k-nearest neighbor analysis, and three modern classification methods that are used extensively in the area of machine learning. Results showed that the logit model performs relatively well in classifying individuals into employed and unemployed categories based on individual attributes.

Results of the cross-sectional and longitudinal analysis were mixed, but not inconsistent with our prior expectations that use of alcohol or drug has a negative impact on a person's propensity to be employed. Cross-sectional results show a clear negative impact of past substance use on a person's employment probability among all demographic groups examined (by gender: all persons, blacks, Hispanics, families with income below the poverty line, and high users of alcohol or drugs). However, when current and past use are considered together, only women seem to experience negative impacts. The results of the longitudinal analysis are less clear, although they do indicate that negative impacts are associated with the interaction between substance use measures and human capital variables. Limitations of the study are pointed out and suggestions are made for future research.

Private versus Public Relief: Utilization of Food Pantries versus Food Stamps among Poor Households in Allegheny County, Pennsylvania
Beth Osborne Daponte

Full Text: DP 1091-96

The research presented examines the role of private versus public food assistance programs in alleviating food shortages among poor households. First, multinomial probit models are used to examine which factors affect four alternative food assistance choices poor households make: (a) to use Food Stamps, (b) to use a food pantry, (c) to use both programs, or (d) to use neither program. Second, the efficacy of food pantries and food stamps in alleviating food shortages is investigated by using binomial probit models which estimate whether alternative food assistance programs have an effect on (a) whether the household perceives food shortages; and (b) whether a child's physical well-being is being compromised by a lack of food. The research uses data collected by the Food Distribution Research Project, which in 1993 surveyed 400 households below 185 percent of the poverty level.

Why Did the SSI-Disabled Program Grow So Much? Disentangling the Effect of Medicaid
Aaron S. Yelowitz

Full Text: DP 1090-96

The participation rate for working-age adults in the Supplemental Security Income (SSI) program increased by 37 percent from 1987 to 1993. This paper examines the role of public health insurance provided through Medicaid on the SSI participation decision. I use the rapid growth in Medicaid expenditure across states and over time as a proxy for its value. The estimation is complicated by the easing of standards for determining disability. If the marginal individual who entered SSI under these easier standards was healthier than the average participant, then average Medicaid expenditure would fall. Thus, conventional OLS estimates could lead to a spurious negative correlation between average Medicaid expenditure and SSI participation. I therefore apply two-stage least squares (TSLS) to estimate Medicaid's effect, using Medicaid expenditure for blind and elderly SSI recipients, and adult and child AFDC recipients as instruments for disabled Medicaid expenditure.

The TSLS estimates indicate that rising Medicaid expenditure significantly increased the SSI participation for whites, but had little effect on African Americans. Among whites, the rising value of Medicaid explains one-third of the growth in SSI participation.

PERSON OR PLACE? Parametric and Semiparametric Estimates of Intrametropolitan Earnings Variation
John B. Engberg and Taeil Kim

Full Text: DP 1089-96

Some scholars have attributed earnings differences among locations to labor market conditions ("place effects") whereas others have focused on the skill level of residents ("person effects"). We estimate a variety of selection models in an effort to detect differences in labor market conditions while controlling for differences in skill levels. We maintain the assumption that there are no barriers to mobility within a metropolitan area for highly educated white men, which implies that intra-urban differences for this group reflect sorting by skill and earnings rather than real wage differences for equally productive workers. This prediction allows us to reject several conventional parametric selection models. We estimate a semiparametric selection model that yields strong evidence that, for less educated white men, the apparent suburban earnings premium is due to sorting rather than labor market differences.

Understanding the Measurement of Hunger and Food Insecurity in the Elderly
Christine M. Olson, Anne Kendall, Wendy S. Wolfe, and Edward A. Frongillo, Jr.

Full Text: DP 1088-96

The elderly are one of the population subgroups at greatest risk for hunger and food insecurity. To date, no accurate measures of this problem have been developed. What is needed are a thorough understanding of the phenomenon, and an assessment of how the elderly perceive and answer items commonly used to measure hunger and food insecurity in other subgroups.

In-depth, open-ended interviews were conducted with forty-one low-income urban black and rural white residents of upstate New York. Results suggest a conceptual framework of food insecurity in the elderly with two significant differences from frameworks proposed for younger families: the major role of health problems and physical disabilities, and the impact of personal history on perceptions of food insecurity. In a telephone follow-up (approximately six months after the initial interviews) twenty-four respondents were asked commonly used food insecurity questionnaire items from six different sources. Results suggest that hunger and food insecurity among the elderly can be measured directly. The commonly used measures tested here will help categorize the stages of food insecurity. However, these direct measures might underestimate the prevalence of food insecurity because of a perceived reluctance to report problems with food.

Employer Skill Needs and Labor Market Outcomes by Race and Gender
Harry J. Holzer

Full Text: DP 1087-96

In this paper I use data from a recent survey of employers to investigate the effects of employer skill needs on the wage levels and employment of newly hired workers, and especially on how these outcomes differ by race and gender. The skill needs are measured by various human capital credentials required of applicants at the hiring stage (educational attainment, specific experience, prior training) and by the daily task performance of those who are newly hired (reading/writing, arithmetic, use of computers).

The results show that few new jobs are available to those workers who lack most of these credentials or who cannot perform most of these tasks. This is true even of jobs that do not require applicants to have college degrees.

The hiring and task performance requirements of new jobs are associated with lower employment levels of blacks relative to whites within each gender, and some tasks are associated with higher employment levels of females relative to males. These requirements also have significant effects on starting hourly wages. Both effects are found even after controlling for the educational attainments of hired workers.

The effects of employer skill needs on employment patterns and wages help to account for some of the observed differences across groups in hourly wages, especially between black and white males, after controlling for education. Recent trends over time in relative wages and employment across these groups also seem to be quite consistent with these findings, along with evidence that these skill needs have been rising among employers.

In addition, I find that various other employer characteristics such as their size, location, and the racial composition of their clientele also have significant effects on their tendencies to hire blacks. These findings suggest that employer preferences across racial groups play some role in determining employment outcomes of these groups, even after controlling for skill needs.

Spatial Factors and the Employment of Blacks at the Firm Level
Harry J. Holzer and Keith R. Ihlanfeldt

Full Text: DP 1086-96

In this paper we use data from a new survey of over 3,000 employers in four major metropolitan areas to investigate the determinants of black employment and wages at the firm level. We focus specifically on two factors that are likely to influence the spatial distribution of black employment: the proximity of firms to the residential locations of various racial groups and to public transit. We also consider the effects on black employment of other factors, such as employers' skill needs and some likely determinants of their preferences across groups.

Our main finding is that employers' proximity to black residences and to public transit increases the likelihood that they will hire black employees. This is true even when we include detailed controls for the skills needed by employers and also for the race of customers and of those responsible for hiring, which independently affect the levels of black employment at firms.

Proximity to public transit and especially to black residences accounts for major portions of the higher black employment rates at central-city than suburban firms. The residential effects are relatively strong for employers who recruit through informal methods and weak for those who use newspapers, thus suggesting that information may play a role in the distance effects.

We also find some evidence that employers' proximity to black residential populations results in lower wages for workers.

Employer Hiring Decisions and Antidiscrimination Policy
Harry J. Holzer

Full Text: DP 1085-96

Have federal antidiscrimination policies been effective in improving employment outcomes for minorities and females? If so, why have the relative wages and employment of blacks deteriorated in recent years? What other factors on the demand side of the labor market have contributed to these developments, and what are the appropriate public policy responses?

In this paper I address these issues. I begin by reviewing evidence in the literature on the recent employment problems of minorities and on hiring discrimination. I specifically consider the effectiveness of Equal Employment Opportunity laws and Affirmative Action programs in improving employment outcomes for minorities as well as females.

I then provide new evidence from a recent survey of over 3000 employers on the determinants of hiring. I focus on employer skill needs and hiring procedures, as well as the racial mix of the firm's applicants and customers, in determining employment outcomes for minorities and females. Employer use of Affirmative Action in recruiting and hiring is considered as well.

Finally, I consider the implications of these findings for the usefulness of antidiscrimination policies and other approaches for improving employment outcomes for less-skilled minorities.

The Medicaid Notch, Labor Supply, and Welfare Participation: Evidence from Eligibility Expansions
Aaron S. Yelowitz

Full Text: DP 1084-96

I assess the impact of losing public health insurance on the labor market decisions of women by examining a series of Medicaid eligibility expansions targeted toward young children. These targeted expansions severed the historical tie between AFDC and Medicaid eligibility. The reforms allowed a mother's earnings to increase without affecting her young children's public health insurance. Increasing the income limit for Medicaid resulted in a decrease in AFDC participation and an increase in labor force participation among these women. The effects were large for ever-married women, but were negligible for never-married women.

Estimating the Prevalence of Hunger and Food Insecurity: The Validity of Questionnaire-Based Measures for the Identification of Households
Edward A. Frongillo, Jr., Barbara S. Rauschenbach, Christine M. Olson, Anne Kendall, and Ana G. Colmenares

Full Text: DP 1083-96

This study had three objectives: (1) to assess the validity of questionnaire-based measures in identifying households experiencing hunger and food insecurity, (2) to examine the interrelationships of different questionnaire-based measures, and (3) to examine the construction of a continuous food insecurity scale intended to differentiate three levels of food insecurity within households.

A 1993 survey of 193 randomly sampled rural households with women and children living at home provided data on demographics, risk factors for food insecurity, Radimer/Cornell, CCHIP, and NHANES III hunger and food insecurity items, coping strategies, fruit and vegetable consumption, disordered eating behaviors, height, weight, dietary recall, and household food-stores inventory. This information was used to develop a definitive criterion measure for hunger and food insecurity, against which the Radimer/Cornell and CCHIP questionnaire-based measures, the NHANES III item, and the continuous food insecurity scale were tested for their specificity and sensitivity in measuring levels of food insecurity.

Gender and the Welfare State
Ann Shola Orloff

Full Text: DP 1082-96

Gender relations, as embodied in the sexual division of labor, compulsory heterosexuality, discourses and ideologies of citizenship, motherhood, masculinity and femininity, and the like, profoundly shape the character of welfare states. Likewise, the institutions of social provision the set of social assistance and social insurance programs, universal citizenship entitlements, and public services to which we refer as "the welfare state" affect gender relations in various ways. Although many recent studies of the welfare state use a comparative analysis to study the factors shaping the welfare state, few of these studies have paid systematic attention to gender. Similarly, most feminist work has not been systematically comparative. This paper summarizes the current state of understanding of the varying effects of welfare states on gender relations, and vice versa.

Welfare Recipiency and Welfare Recidivism: An Analysis of the NLSY Data
Jian Cao

Full Text: DP 1081-96

This paper analyzes welfare recipiency and recidivism of first-time AFDC recipients over the 168-month (14-year) period from January 1978 to December 1991 using the National Longitudinal Survey of Youth (NLSY) database. Duration of a single AFDC spell is short, but repeated welfare dependency is common. On average, 57 percent of former AFDC recipients return to the rolls after an exit and most of them come back within two years. Having a newborn is the most important direct cause for going on the AFDC rolls and for recidivism. The results from bivariate duration models suggest a negative correlation due to unobserved heterogeneity between the previous welfare recipiency and recidivism. An inverted U-shaped hazard function is found for both the first and second spells on AFDC and the intervening off-AFDC spell. Age, years of education or AFQT score, martial status, ethnic origin, and region are the significant correlates with a recipient's initial welfare dependency and recidivism. However, few variables have significant effects on the duration of the second AFDC spell and off-AFDC spell at the conventional statistical level.

A Structural Model of Multiple Welfare Program Participation and Labor Supply
Michael Keane, and Robert Moffitt

Full Text: DP 1080-96

One of the long-standing issues in the literature on transfer programs for the U.S. low-income population concerns the high cumulative marginal tax rate on earnings induced by participation in the multiplicity of programs offered by the government. Empirical work on the issue has reached an impasse partly because the analytic solution to the choice problem is intractable and partly because the model requires the estimation of multiple sets of equations with limited dependent variables, an estimation problem which until recently has been computationally infeasible. In this paper we estimate a model of labor supply and multiple program participation using methods of simulation estimation that enable us to solve both problems. The results show asymmetric wage and tax rate effects, with fairly large wage elasticities of labor supply but very inelastic responses to moderate changes in cumulative marginal tax rates, implying that high welfare tax rates do not necessarily induce major reductions in work effort.

Differential Mortality and Wealth Accumulation
Orazio P. Attanasio and Hilary W. Hoynes

Full Text: DP 1079-96

An issue central to the life-cycle theory of consumer behavior, and to many policy questions, is asset accumulation and decumulation. One of the main implications of the life-cycle model is that assets are decumulated in the last part of life. Most empirical studies of asset accumulation use cross-sectional data to estimate mean or median wealth-age profiles, but the use of cross sections to estimate the age profile of assets is full of pitfalls. If, for example, wealth and mortality are related, in that poorer individuals die at a younger age, one overestimates the last part of the wealth-age profile when using cross-sectional data because means (or other measures of location) are taken over a population which becomes "richer" as it ages. In our examination of the effect of differential mortality on cross-sectional estimates of wealth-age profiles, we quantify the dependence of mortality rates on wealth and then use these estimates to "correct" wealth-age profiles for sample selection due to differential mortality. We estimate mortality rates as a function of wealth and age for a sample of married couples drawn from the Survey of Income and Program Participation (SIPP). Our results show that accounting for differential mortality produces wealth profiles with significantly more dissaving among the elderly.