A welfare reform based on help for working parents

The Help for Working Parents Plan-developed by Dr. Heidi Hartmann and Dr. Barbara Bergmann in collaboration with the Economists' Policy Group for Women's Issues, which they co-chair – offers an innovative welfare reform program that encouragesjob holding, and sustains working parents and their children in decency. The HWP provides benefits to both single- and dual-parent households, to families who are under the poverty line and to those who waver along it. Increased child care and health care benefits, food stamps, the Earned Income Tax Credit, and housing assistance are the critical components of the HWP plan – elements which will afford low-wage workers the opportunity to attain an above-poverty standard of living. It also provides a low-cash fallback option to parents who do not work for pay or are unemployed. Bergmann and Hartmann estimate that 60 percent of welfare recipients would work if the HWP plan were implemented.     

LONGER‐RUN EFFECTS OF ANTI‐POVERTY POLICIES ON DISADVANTAGED NEIGHBORHOODS

We assess evidence on the longer‐run effects of minimum wages, the Earned Income Tax Credit, and welfare on key economic indicators of economic self‐sufficiency in disadvantaged neighborhoods. The evidence suggests that the longer‐run effects of the Earned Income Tax Credit are to increase employment and to reduce poverty and public assistance. We also find some evidence consistent with higher welfare benefits having longer‐run adverse effects, and stronger evidence that tighter welfare time limits reduce poverty and public assistance in the longer‐run. The evidence on the longer‐run effects of the minimum wage on poverty and public assistance is not robust. (JEL J22, J23, J38)     

Welfare Reform and the Well-Being of Single Female-Headed Families: A Semi-Parametric Analysis

Single female-headed families with children (SFHFwC) have historically been the primary recipients of federal public cash assistance payments in the United States. Recent welfare reform initiatives established work requirements and cumulative time limits on public cash assistance payments. Three findings in this paper have significant implications for the long-term efficacy of welfare reform initiatives. First, SFHFwC made significant and broad-based gains in their economic well-being from 1993 to 1999. Second, increased propensities of single mothers to leave welfare and enter the workforce from 1993 to 1999, behavior consistent with incentives created by welfare reform measures, do not account for a major portion of these observed gains. Third, improved area economic conditions and increased educational levels of single mothers account for a major share of gains in well-being.     

POVERTY, TNEQUALTTY, AND FAMTLY LIVING STANDARDS IMPACTS ACROSS SEVEN NATIONS: THE EFFECT OF NONCASH SUBSIDIES FOR HEALTH, EDUCATION AND HOUSING

The main aim of this paper has been to summarize the impact of noncash income–health and health education benefits, and imputed rent-on living standards, income distribution and poverty in seven nations at the beginning of the 1980s using the Luxembourg Income Study database. Our results do not give rise to a pattern of national differences in poverty rates or income inequality which are markedly different from that which emerges from previous LIS research based on cash income alone. While these results may be sensitive to the techniques used to measure and value noncash benefits in this paper, it appears that noncash income reinforces the redistributive impact or conventional (cash) tax-transfer mechanisms rather than acting to offset them in any major way.     

Subsidies on low-skilled workers’ social security contributions: the case of Belgium

In recent decades, many “Making Work Pay” policies have been implemented in OECD countries. These policies aim at improving the financial incentives for work, while maintaining high levels of social protection. Examples include the Earned Income Tax Credit in the USA and the Working Families’ Tax Credit in the UK. While these policies are proven to be quite effective with respect to poverty alleviation, many worry that they may discourage labor supply on the intensive margin. We consider an alternative measure implemented in Belgium: the Workbonus, which subsidizes social security contributions for low-skilled workers. This program differs from other measures in that the eligibility and the level of the subsidy are based on full-time equivalent earnings. The instrument therefore distinguishes between low skill and low effort and avoids the above-mentioned disincentive effect. We assess the effects of the Workbonus on labor supply using a particular discrete-choice labor supply model, in which individuals are assumed to choose among jobs belonging to individual-specific latent choice sets. In particular, we compare the Workbonus with a tax credit system temporarily implemented in Belgium in 2001–2004. Results show that both measures have a positive impact on labor supply. However, the Workbonus is more efficient in terms of cost per additional full-time equivalent position created and avoids the “part-time trap” implicit in the tax credit system.     

Towards a unified scheme for environmental and social protection: Learning from PES and CCT experiences in developing countries

Environmental protection and poverty alleviation in the developing world are usually heralded as joint objectives. However, these two goals are often associated with different sectoral policy instruments. While so−called payments for environmental services (PES) are increasingly being promoted for environmental protection, poverty alleviation is increasingly addressed by conditional cash transfers (CCT) program. These instruments although aimed to achieve distinct objectives have a number of similarities and challenges in their design and implementation phases. This paper elaborates on these similarities and develops a unifying generic framework that is used to discuss the extent to which both approaches could be unified.     

Trends in Child Poverty in Australia, 1982 to 1995–96

This study suggests that child poverty in Australia fell by about one-third between 1982 and 1995–96, largely as a result of the very substantial increases in government cash payments to lower income families with children. However, while there were sharp falls in poverty among dependent children, poverty rates among 15 to 18 year-olds who had left the parental home or who were still living at home but not in full-time study increased very sharply. In addition, the after-housing poverty picture did not look so optimistic, apparently due to a compositional shift in the types of families in after-housing poverty.     

The effects of government transfers on monthly cycles in drug abuse,hospitalization and mortality

This paper analyzes the monthly patterns of adverse outcomes due to the consumption of illegal drugs by recipients of government transfer payments. We find evidence that certain subpopulations on government cash aid significantly increase their consumption of drugs when their checks arrive at the beginning of the month, and as a result, experience adverse events including hospitalization and death. Using data from California, we find that the overall rate of drug-related hospital admissions increases abruptly at the beginning of the month, with admissions increasing 23% during the first five days of the month. We find that this cycle is driven largely by recipients of Supplemental Security Income (SSI). SSI recipients also experience an abrupt 22% increase in within hospital mortality after receiving their checks. These findings suggest that “full wallets” adversely affect some aid recipients, and that policymakers should explore alternate disbursement regimes such as a staggered disbursement schedule or in-kind support that have the potential to reduce the rate of adverse events.     

Australian Family Tax Reform and the Targeting Fallacy

Over recent decades, Australia's highly progressive, individual‐based taxation of families has been replaced by a system that tends towards joint taxation with an inverted U‐shaped rate scale. The reform has been implemented by introducing family‐income‐targeted child payments (now Family Tax Benefit Part A) and by lowering tax rates on higher incomes. The new system has shifted the burden of taxation to two‐earner families on low and average wages and, in particular, to working married mothers as second earners. For reasons of fairness and efficiency, we propose returning to more progressive individual taxation and universal family payments.     

税制改革与公司投资价值相关性

本文以我国2009年增值税转型为基础,结合2008年公司所得税税制改革,检验了增值税转型过程中公司投资决策的价值相关性变化趋势。研究结果表明,增值税转型对投资价值相关性的影响,存在投资补贴的正面效应和所得税负面效应。实证结果发现,2009年的增值税转型中,公司投资补贴的正面效应大于所得税负面效应,这在整体上增加了公司投资价值相关性;而且所得税税率越低,增值税转型对投资价值相关性的促进作用越大。因此,我国的税制改革在整体上提高了资本市场的资源配置效率。本文的研究结果为深入分析我国当前税制改革的作用,提供了重要的理论依据。     

THE EFFECTIVENESS OF MINIMUM-WAGE INCREASES IN REDUCING POVERTY: PAST, PRESENT, AND FUTURE

Extending the work of Card and Krueger, we find minimum-wage increases (1988–2003) did not affect poverty rates overall, or among the working poor or among single mothers. Despite employment growth among single mothers, most gainers lived in nonpoor families and most working poor already had wages above the proposed minimums. Simulating a new federal minimum wage of $7.25 per hour, we find 87% of workers who benefit live in nonpoor families. Poor single mothers receive 3.8% of all benefits. Expanding the Earned Income Tax Credit would far more effectively reduce poverty, especially for single mothers. ( JEL J21, J31, J38)     

Periodicals Received

This paper reports the results of an empirical test of the hypothesis that three mechanisms of poverty reduction-improved market opportunities, government cash transfer payments, and government in-kind transfer payments have differential impacts on the relative return to legal and illegal activity and, in turn, on the rate of property crime. In addition, the paper reports empirical tests of the hypothesis that these differential impacts of market and government policy mechanisms vary by type of property crime.

Employing measures of each of these mechanisms, time series models for Burglary, Auto Theft, and Robbery are estimated from yearly, national, Uniform Crime Report (UCR) data for the period 1959 through 1995. The results indicate that poverty reductions due to improved market conditions have similar impacts on each type of property crime. However, the direction and magnitude of the impact of different government policy mechanisms varies between and within particular types of crimes. The paper concludes with an application of these findings to recent legislation, The Temporary Assistance for Needy Families Act (TANF), which overhauled the federal public assistance program.     

Expanding New York State's Earned Income Tax Credit Programme: the effect on work,income and poverty

Given its favourable employment incentives and ability to target the working poor, the Earned Income Tax Credit (EITC) has become the primary antipoverty programme at both the federal and state levels. However, when evaluating the effect of EITC programmes on income and poverty, governments generally calculate the effect using simple accounting, where the value of the state or federal EITC benefit is added to a person's income. These calculations omit the behavioural incentives created by the existence of these programmes, the corresponding effect on labour supply and hours worked, and therefore the actual effect on income and poverty. This article simulates the full effect of an expansion of the New York State EITC benefit on employment, hours worked, income, poverty and programme expenditures. These results are then compared to those omitting labour supply effects. Relative to estimates excluding labour supply effects, the preferred behavioural results show that an expansion of the New York State EITC increases employment by an additional 14?244 persons, labour earnings by an additional $95.8 million, family income by an additional $84.5 million, decreases poverty by an additional 56?576 persons and increases costs to the State by $29.7 million.     

Assessing the Welfare Impact of Tax Reform: A Case Study of the 2001 U.S. Tax Cut

This note acknowledges a programming error in our paper, “Assessing the Welfare Impact of Tax Reform: A Case Study of the 2001 U.S. Tax Cut” (Review of Income and Wealth, 58(2), 233–56, 2012). Correcting the error primarily has the effect of scaling the calculated family welfare impact of 2001 U.S. Tax Cut. The primary conclusions from the analysis, however, are unaffected.     

Quantile regression for duration data: A reappraisal of the Pennsylvania Reemployment Bonus Experiments

We argue that quantile regression methods can play a constructive role in the analysis of duration (survival) data offering a more flexible, more complete analysis than is typically available with more conventional methods. We illustrate the approach with a reanalysis of the data from the Pennsylvania Reemployment Bonus Experiments. These experiments, conducted in 1988–89, were designed to test the efficacy of cash bonuses paid for early reemployment in shortening the length of insured unemployment spells     

WHY IS CASH (STILL) SO ENTRENCHED? INSIGHTS FROM CANADIAN SHOPPING DIARIES

One similarity among many developed economies is the predominance of cash over electronic payments in terms of payment frequency, especially for the low‐value transactions that are the bulk of retail payments. We use the Bank of Canada's 2009 Methods‐of‐Payment Survey, which collected information on consumers' payment choices through shopping diaries, to estimate a simple model of choice between cash and other payment methods. Results suggest that the main reasons cash is still a popular payment instrument in Canada, especially for low‐value transactions, are its wide acceptance among merchants compared with other alternatives, speed and ease of use, and low marginal cost when on hand. (JEL E41, D12, L81)     

Decomposing Vulnerability to Poverty

This paper applies the decomposition of the Foster–Greer–Thorbecke poverty index to the measurement of individual vulnerability to poverty. I highlight that poverty risk can be expressed as a function of expected incidence, expected intensity, and expected variability below the poverty line, three essential aspects for improving the design of appropriate risk‐management policies. An empirical illustration is provided using the British Household Panel Survey and the Italian Survey on Household Income and Wealth.     

Rural livelihoods in Armenia

This article explores the structure of the rural economy in Armenia from a farm household perspective. Ownership of capital and access to activities are examined on the basis of data from a recent large‐scale survey of farm households in Armenia. Different measures for the outcome of livelihood strategies in terms of well‐being are observed. Income‐poor households are found to be less well endowed especially with financial and social capital. They derive smaller income shares from economic activities and more from dissaving and social payments. The findings are relevant to policies aimed at alleviating rural poverty.     

Work Me Not Into Temptation: Exploring the Relationship between Work and Healthy Eating in Dieters Using Data from the HILDA Survey

We explore if competing demands measured in terms of market and non‐market activities impact on dieters’ resolve to eat healthily. The analysis uses data from 2007 and 2009 of the Household Income and Labour Dynamics of Australia (HILDA) survey. The estimation strategy employs a random effects maximum likelihood estimator. For women, being unemployed is negatively associated with healthy eating whereas having young children is positively associated with healthy eating. For both genders, being divorced is negatively associated with healthy eating. Working in higher socioeconomic occupations is positively associated with healthy eating.