Poverty and Deep Poverty

  • Kathryn Edin
  • Linda Burton
  • David Grusky

Leaders: Linda Burton, Kathryn Edin, David Grusky

The Supplemental Poverty Measure (SPM) reveals substantial post-1970 reductions in poverty under a constant (i.e., “anchored”) threshold, but this trend masks worrisome developments at the very bottom of the distribution. Although the overall SPM has trended downward since 1970, the SPM for households with less than half of the anchored threshold level (i.e., “deep poverty”) has remained stable since 1968. Even more worrying, the most extreme forms of poverty, such as living on less than $2 per day (per person), have in fact increased over the last two decades. The main tasks of our Poverty and Deep Poverty RG are to describe trends in poverty and deep poverty, to assess the effectiveness of current anti-poverty programs, and to examine the likely payoff to introducing new anti-poverty programs. We present a sampling of relevant projects below.

Frequent Reporting Project: Why are unemployment statistics reported monthly whereas poverty statistics are reported only once a year (and with such a long lag)? The CPI is hard at work solving this problem.

California Poverty Project: The CPI, in collaboration with the Public Policy Institute of California, issues the California Poverty Measure (CPM) annually. There are plans afoot to make it an even more powerful policy instrument. 

Ending Poverty in California: Is it possible to substantially reduce poverty in California by relying entirely on evidence-based programs? It indeed is.

The National Poverty StudyThe country’s one-size-fits-all poverty policy ignores the seemingly profound differences between suburban poverty, immigrant poverty, reservation poverty, rural white poverty, deindustrializing poverty, and the many other ways in which massive deprivation plays out in the U.S. The National Poverty Study, which will be the country’s first qualitative census of poverty, takes on the problem.

Income supports and deep poverty: The U.S. does not rely heavily on unconditional cash transfers in its poverty programming. Is this a mistake? The CPI is assisting Y Combinator in providing the first U.S. evidence on unconditional income support since the negative income tax experiments of the 1970s.

Disability and deep poverty: The country’s disability programs are an important anti-poverty weapon. In evaluating their effectiveness, it is important to determine whether the low employment rates among program recipients reflects an underlying (low) capacity for employment, as opposed to the labor-supply effects of the programs themselves. Although it’s long been difficult to assess such labor-supply effects, now there’s a way forward.

Evictions and deep and extreme poverty: Are evictions an important cause of deep and extreme poverty? This line of research examines the extent to which deep and extreme poverty can be reduced with a “housing first” policy that ramps up federal housing programs.

Deep poverty and TANF add-ons: The country is implicitly running hundreds of experiments on how best to structure TANF programs, but it hasn’t had the capacity to evaluate them. Are administrative data the answer?

Poverty - CPI Research

Title Author Media
Can Poverty in America Be Compared to Conditions in the World’s Poorest Countries? H. Luke Shaefer, Pinghui Wu, Kathryn Edin

Can Poverty in America Be Compared to Conditions in the World’s Poorest Countries?

Author: H. Luke Shaefer, Pinghui Wu, Kathryn Edin
Publisher:
Date: 07/2016

Some contend that the American poor are affluent by international standards, and recent survey evidence finds that Americans have deeply divided views about the conditions faced by the poor in this country. To what extent can poverty in the United States be compared to conditions in the world’s poorest nations? Few analysts have examined this question beyond “instrumental”measures of poverty such as income and consumption that only indirectly capture well­being (Sen, 1999). The current paper uses available evidence to examine this question based on four direct indicators of wellbeing: 1) life expectancy; 2) infant mortality; 3) risk of homicide, and 4) risk of incarceration. By these metrics, well­being is highly stratified in the U.S. Among Americans at the bottom of the economic ladder, quality of life looks similar to what is experienced in countries with pe r­capita economic output that is a small fraction of that in the U.S.

Family Ruptures, Stress, and the Mental Health of the Next Generation Petra Persson, Maya Rossin-Slater

Family Ruptures, Stress, and the Mental Health of the Next Generation

Author: Petra Persson, Maya Rossin-Slater
Publisher: NBER
Date: 05/2016

This paper studies how in utero exposure to maternal stress from family ruptures affects later mental health. We find that prenatal exposure to the death of a maternal relative increases take-up of ADHD medications during childhood and anti-anxiety and depression medications in adulthood. Further, family ruptures during pregnancy depress birth outcomes and raise the risk of perinatal complications necessitating hospitalization. Our results suggest large welfare gains from preventing fetal stress from family ruptures and possibly from economically induced stressors such as unemployment. They further suggest that greater stress exposure among the poor may partially explain the intergenerational persistence of poverty.

Coming of Age in the Other America Stefanie DeLuca, Susan Clampet-Lundquist, Kathryn Edin

Coming of Age in the Other America

Author: Stefanie DeLuca, Susan Clampet-Lundquist, Kathryn Edin
Publisher: Russell Sage Foundation
Date: 04/2016

Recent research on inequality and poverty has shown that those born into low-income families, especially African Americans, still have difficulty entering the middle class, in part because of the disadvantages they experience living in more dangerous neighborhoods, going to inferior public schools, and persistent racial inequality. Coming of Age in the Other America shows that despite overwhelming odds, some disadvantaged urban youth do achieve upward mobility. Drawing from ten years of fieldwork with parents and children who resided in Baltimore public housing, sociologists Stefanie DeLuca, Susan Clampet-Lundquist, and Kathryn Edin highlight the remarkable resiliency of some of the youth who hailed from the nation’s poorest neighborhoods and show how the right public policies might help break the cycle of disadvantage.

Poverty and Child Development: A Longitudinal Study of the Impact of the Earned Income Tax Credit Rita Hamad, David H. Rehkopf

Poverty and Child Development: A Longitudinal Study of the Impact of the Earned Income Tax Credit

Author: Rita Hamad, David H. Rehkopf
Publisher: American Journal of Epidemiology
Date: 04/2016

Although adverse socioeconomic conditions are correlated with worse child health and development, the effects of poverty-alleviation policies are less understood. We examined the associations of the Earned Income Tax Credit (EITC) on child development and used an instrumental variable approach to estimate the potential impacts of income. We used data from the US National Longitudinal Survey of Youth (n = 8,186) during 1986–2000 to examine effects on the Behavioral Problems Index (BPI) and Home Observation Measurement of the Environment inventory (HOME) scores. We conducted 2 analyses. In the first, we used multivariate linear regressions with child-level fixed effects to examine the association of EITC payment size with BPI and HOME scores; in the second, we used EITC payment size as an instrument to estimate the associations of income with BPI and HOME scores. In linear regression models, higher EITC payments were associated with improved short-term BPI scores (per $1,000, β = −0.57; P = 0.04). In instrumental variable analyses, higher income was associated with improved short-term BPI scores (per $1,000, β = −0.47; P = 0.01) and medium-term HOME scores (per $1,000, β = 0.64; P = 0.02). Our results suggest that both EITC benefits and higher income are associated with modest but meaningful improvements in child development. These findings provide valuable information for health researchers and policymakers for improving child health and development.

Childhood Environment and Gender Gaps in Adulthood Raj Chetty, Nathaniel Hendren, Frina Lin, Jeremy Majerovitz, Benjamin Scuderi

Childhood Environment and Gender Gaps in Adulthood

Author: Raj Chetty, Nathaniel Hendren, Frina Lin, Jeremy Majerovitz, Benjamin Scuderi
Publisher: NBER
Date: 02/2016

We show that differences in childhood environments play an important role in shaping gender gaps in adulthood by documenting three facts using population tax records for children born in the 1980s. First, gender gaps in employment rates, earnings, and college attendance vary substantially across the parental income distribution. Notably, the traditional gender gap in employment rates is reversed for children growing up in poor families: boys in families in the bottom quintile of the income distributionare less likely to work than girls. Second, these gender gaps vary substantially across counties and commuting zones in which children grow up. The degree of variation in outcomes across places is largest for boys growing up in poor, single-parent families. Third, the spatial variation in gender gaps is highly correlated with proxies for neighborhood disadvantage. Low-income boys who grow up in high-poverty, high-minority areas work significantly less than girls. These areas also have higher rates of crime, suggesting that boys growing up in concentrated poverty substitute from formal employment to crime. Together, these findings demonstrate that gender gaps in adulthood have roots in childhood, perhaps because childhood disadvantage is especially harmful for boys.

Poverty - CPI Affiliates

David Grusky Co-Director, Center on Poverty and Inequality; Professor of Sociology Stanford University
Kathryn Edin Poverty Research Group Leader; Bloomberg Distinguished Professor of Sociology Johns Hopkins University
Linda Burton Poverty Research Group Leader; Dean of the Social Sciences Duke University
Arloc Sherman Senior Fellow Center on Budget and Policy Priorities
Charles Varner Executive Director, Center on Poverty and Inequality; Pathways Senior Editor Stanford University

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Poverty - Other Research

Title Author Media
Asset Limits, SNAP Participation, and Financial Stability Caroline Ratcliffe, Signe-Mary McKernan, Laura Wheaton, Emma Cancian Kalish, Catherine Ruggles, Sara Armstrong, Christina Oberlin

Asset Limits, SNAP Participation, and Financial Stability

Author: Caroline Ratcliffe, Signe-Mary McKernan, Laura Wheaton, Emma Cancian Kalish, Catherine Ruggles, Sara Armstrong, Christina Oberlin
Publisher: The Urban Institute
Date: 06/2016

Asset limits in means-tested programs are designed to target benefits to the neediest people, but they can discourage low-income households from saving and can increase program costs when participants leave and reenter the program (i.e., churn) for administrative reasons. Using Survey of Income and Program Participation data from 1997 to 2013, we find that relaxing Supplemental Nutrition Assistance Program (SNAP) asset limits through broad-based categorical eligibility increases the likelihood that low-income people live in a household with a bank account (by 5 percent) and at least $500 in that bank account (by 8 percent). We also find that relaxed asset limits reduce SNAP churn by 26 percent.

Addressing Child Poverty: How Does the United States Compare With Other Nations? Timothy Smeeding, Catherine Thévenot

Addressing Child Poverty: How Does the United States Compare With Other Nations?

Author: Timothy Smeeding, Catherine Thévenot
Publisher: Academic Pediatrics
Date: 04/2016

Poverty during childhood raises a number of policy challenges. The earliest years are critical in terms of future cognitive and emotional development and early health outcomes, and have long-lasting consequences on future health. In this article child poverty in the United States is compared with a set of other developed countries. To the surprise of few, results show that child poverty is high in the United States. But why is poverty so much higher in the United States than in other rich nations? Among child poverty drivers, household composition and parent's labor market participation matter a great deal. But these are not insurmountable problems. Many of these disadvantages can be overcome by appropriate public policies. For example, single mothers have a very high probability of poverty in the United States, but this is not the case in other countries where the provision of work support increases mothers' labor earnings and together with strong public cash support effectively reduces child poverty. In this article we focus on the role and design of public expenditure to understand the functioning of the different national systems and highlight ways for improvements to reduce child poverty in the United States. We compare relative child poverty in the United States with poverty in a set of selected countries. The takeaway is that the United States underinvests in its children and their families and in so doing this leads to high child poverty and poor health and educational outcomes. If a nation like the United States wants to decrease poverty and improve health and life chances for poor children, it must support parental employment and incomes, and invest in children's futures as do other similar nations with less child poverty.

Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty Arloc Sherman, Chuck Marr, Chye-Ching Huang, Cecile Murray

Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty

Author: Arloc Sherman, Chuck Marr, Chye-Ching Huang, Cecile Murray
Publisher: Center on Budget and Policy Priorities
Date: 04/2016

Working childless adults[ are the lone group that the federal tax code taxes into or deeper into poverty, largely because they are also the only group largely excluded from the Earned Income Tax Credit (EITC).  For low-income working families with children, the EITC encourages and rewards work and offsets federal payroll and income taxes.  The EITC for childless adults, by contrast, is so small that it effectively does none of those things. Today, the federal tax code taxes about 7.5 million childless adults aged 21 through 66 into or deeper into poverty.

Including Health Insurance in Poverty Measurement: The Impact of Massachusetts Health Reform on Poverty Sanders Korenman, Dahlia K. Remler

Including Health Insurance in Poverty Measurement: The Impact of Massachusetts Health Reform on Poverty

Author: Sanders Korenman, Dahlia K. Remler
Publisher: NBER
Date: 02/2016

We develop and implement what we believe is the first conceptually valid health-inclusive poverty measure (HIPM)—a measure that includes health care or insurance in the poverty needs threshold and health insurance benefits in family resources—and we discuss its limitations. Building on the Census Bureau’s Supplemental Poverty Measure, we construct a pilot HIPM for the under-65 population under ACA-like health reform in Massachusetts. This pilot is intended to demonstrate the practicality, face validity and value of a HIPM. Results suggest that public health insurance benefits and premium subsidies accounted for a substantial, one-third reduction in the poverty rate. Among low-income families who purchased individual insurance, premium subsidies reduced poverty by 9.4 percentage points.

Changing Family Structures Play a Major Role in the Fight Against Poverty Lawrence Aber, Stuart Butler, Sheldon Danziger, Robert Doar, David T. Ellwood, Judith M. Gueron, Jonathan Haidt, Ron Haskins, Harry J. Holzer, Kay Hymowitz, Lawrence Mead, Ronald Mincy, Richard V. Reeves, Michael R. Strain, Jane Waldfogel

Changing Family Structures Play a Major Role in the Fight Against Poverty

Author: Lawrence Aber, Stuart Butler, Sheldon Danziger, Robert Doar, David T. Ellwood, Judith M. Gueron, Jonathan Haidt, Ron Haskins, Harry J. Holzer, Kay Hymowitz, Lawrence Mead, Ronald Mincy, Richard V. Reeves, Michael R. Strain, Jane Waldfogel
Publisher: AEI-Brookings Working Group on Poverty and Opportunity
Date: 12/2015

Improving the family environment in which children are raised is vital to any serious effort to reduce poverty and expand opportunity.  Twenty-five years of extensive and rigorous research has shown that children raised in stable, secure families have a better chance to flourish.

The family structure in and of itself is an important factor in reducing poverty: children raised in single-parent families are nearly five times as likely to be poor as those in married-couple families.

In Chapter 3 of a new report from the AEI-Brookings Working Group on Poverty and Opportunity, the Working Group recommends policies that:

  1. Promote marriage as the most reliable route to family stability and resources;
  2. Promote delayed, responsible childbearing;
  3. Promote parenting skills and practices, especially among low-income parents; and
  4. Promote skill development, family involvement, and employment among young men as well as women.