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Research Paper On Government Assistance

Poor children in the United States are less healthy than other children, which may be a central factor in why poverty persists across generations. Research approaches that use variation in public programs let researchers disentangle the effects of a program itself from other factors. These approaches confirm the broad benefits of safety net programs that target children’s health and nutrition. They also suggest that access to these programs in early life improves children’s economic well-being as adults, which likely transmits to the next generation.

Poverty is strongly persistent across generations. Studies show that children whose family income is in the bottom 20 percent of earners have a 34 percent chance of remaining there when they reach adulthood.[1] Studies have also established that poor health in childhood reduces economic success in later life.[2] Thus, poorer health may be one of the mechanisms that contributes to the intergenerational transmission of poverty.

Key Facts

  • Children in the U.S. who experience at least one year of poverty are substantially more likely to grow up to be poor adults than children who never experience poverty.
  • Research demonstrates that widespread public health and nutrition interventions for the poor have substantive positive benefits for children that last well into adulthood.
  • Policies that reduce low-income children’s contemporaneous health problems may also be wise investments in terms of reducing future public expenditures.

Federal health and nutrition programs are an important part of the safety net for low-income children. Three of these are Medicaid, the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) and the Supplemental Nutrition Program for Women Infants and Children (WIC). Medicaid alone reaches 45 million low income children in the U.S. and SNAP serves approximately 20 million. 

The importance of these programs has grown significantly since the passage of the Personal Responsibility and Work Reconciliation Act of 1996, which led to a substantial drop in the prevalence of cash assistance. However, as cash assistance declined over the last twenty years, the importance of these three programs has significantly increased. The effectiveness of these programs, however, is regularly debated.

Recent studies have harnessed quasi-experimental approaches that can effectively replicate experimental conditions by comparing children who are exposed to a safety net program (treatment) to children who are not (control). Results of these studies show the widespread benefits health and nutrition programs have for children in poor households.

Medicaid Improves Birth Outcomes and Earnings

Medicaid is the primary source of health insurance for low-income children and includes prenatal and post-partum care for mothers. The largest means-tested program in the U.S., in 2015, Medicaid, with the Children’s Health Insurance Program (CHIP), reached approximately 45.2 million children at a cost of $91.7 billion. Medi-Cal, California’s Medicaid program, and the state’s CHIP program reached 6.8 million children in 2015. 

Studies based on Medicaid expansions between 1986 and 1990 indicate that Medicaid particularly improves health outcomes among children who gained access while in utero. A 1996 study[3] found that a ten-percentage-point increase in the fraction of children covered by Medicaid in utero reduced the incidence of low birth weight by 0.63 percent and the infant mortality rate by 2.8 percent.

Strong evidence also suggests that Medicaid improves later life economic outcomes. Using the 1980s Medicaid expansions, a 2015 study[4] found that early exposure to the program improved adult earnings and tax contributions. For women, each additional year of Medicaid eligibility from birth to age 18 is associated with additional wages of $656 through age 28. While the authors find no wage improvements for men, they do find that an additional year of Medicaid eligibility is associated with a $127 increase in men’s tax payments by age 28. For women, the comparable effect is $247.

SNAP Improves Birth Outcomes and Health

SNAP is a food assistance program provided for individuals (including adults) living in households with income below 130 percent of the poverty guideline. It provides vouchers that can be used to purchase most types of food in grocery stores or other retailers. The average monthly benefit in 2014 was $257 per household, or $125 per person.[5] In 2015 SNAP benefits were provided to 45.8 million individuals. Approximately 20 million of these were children. Under the Cal-Fresh program in California, over two million children receive benefits each year.

Recent studies show that SNAP improves children’s short- and long-term well-being. A 2011 study[6] compared birth outcomes among children born in counties that were early adopters of the Food Stamp program to those in counties that adopted a few years later. Among all families who received Food Stamps, the incidence of low birth weight was about seven percent lower for White infants and about three percent lower for Black infants.

Using the same approach with longitudinal panel data, a 2016 study[7] found that children who were fully exposed to Food Stamps during the first five years of life experienced a 0.3 standard deviation reduction in later life “metabolic syndrome” (e.g. obesity, high blood pressure, heart disease, diabetes). The study also estimates that disadvantaged girls with full access to the program from conception to age five were 0.2 standard deviation more likely to be financially self-sufficient in adulthood than those who did not. 

WIC and Longer-term Health Improvements 

The WIC program targets pregnant women as well as children under the age of five who are considered to be at nutritional risk. Recipients must have a household income below 185 percent of the poverty guideline or participate in the TANF or SNAP programs. WIC benefits specify foods with high levels of protein, calcium, iron and other specific vitamins. In 2014, WIC benefits reached just under two million women and 6.3 million children at a total cost of $6.3 billion.[8]  Approximately 285,000 women and 980,000 children received benefits in California during 2015 at a cost of $1 billion.

In a 2011 study,[9] my co-authors and I used variation across counties in the timing of the program’s initial implementation. We merged data on county-by-county implementation with measures of infant health from U.S. Vital Statistics Natality Files. We found that when WIC is available by the third trimester, the average birth weight among infants born to women with low levels of education increases by approximately seven grams. The probability of being born below the low birth weight threshold also falls by 1.4 percent. 

A 2013 study[10] extended this research design to 2005-09 cohorts using Vital Statistics health data and administrative data on all Texas WIC clinics. This study found WIC to be associated with an average increase in birth weight of 27 grams. It also found a six percent increase in breastfeeding among women with a high school diploma or less. Given the positive linkages between breastfeeding and later health,[11] this finding suggests longer-term health improvements for these children.

Reducing Poverty for Future Generations

The existing body of research makes clear that large-scale public health and nutrition interventions provide far reaching benefits for poor children, though these improvements will not be apparent in an official poverty measure based entirely on household cash income. Nevertheless, because these programs improve adult health, earnings and overall self-sufficiency, they are crucial levers to reducing the intergenerational transmission of poverty.

These policies may also reduce future public expenditures. Using Medicaid Statistical Information System data a recent study[12] estimated that the 1980s and 1990s expansions will lead the government to recoup at least 56 cents of each $1 spent on childhood Medicaid by the time the affected children reach age 60. This estimate does not take into account government savings that accrue after age 60, nor do they include any savings in health care costs as a result of individuals’ improved health.

Marianne Page is a professor of economics at UC Davis and deputy director of the Center for Poverty Research.

[1] e.g. Chetty, Raj et al. 2014. “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States.” Quarterly Journal of Economics.

[2]  e.g., Almond, Douglas et al. 2011. “Killing Me Softly: The Fetal Origins Hypothesis.” Journal of Economic Perspectives.

[3] Currie, Janet et al. 1996. “Saving babies: The efficacy and cost of recent changes in the Medicaid eligibility of pregnant women.” Journal of Political Economy

[4] Brown, David W. et al. 2015. “Medicaid as an investment in children: What is the long-term impact on tax receipts?” National Bureau of Economic Research Working Paper.  

[5] Hoynes, Hilary et al. 2015. “U.S. food and nutrition programs.” Forthcoming in Means-Tested Transfer Programs in the United States, Robert A. Moffitt, ed., University of Chicago Press.

[6] Almond, Douglas et al. 2011. “Inside the war on poverty: The impact of food stamps on birth outcomes.” The Review of Economics and Statistics.

[7] Hoynes, Hilary et al. 2016. “Long-run impacts of childhood access to the safety net.” The American Economic Review.

[8] Hoynes et al., 2015.

[9] Hoynes, Hilary et al. 2011. “Can targeted transfers improve birth outcomes?: Evidence from the introduction of the WIC program.” Journal of Public Economics.

[10] Rossin-Slater, Maya. 2013. “WIC in your neighborhood: New evidence on the impacts of geographic access to clinics.” Journal of Public Economics.

[11] Eidelman, Arthur, et al. 2012. “Section on breastfeeding. American Association of Pediatrics Policy statement: breastfeeding and the use of human milk.” Pediatrics.

[12] Brown, David, et al. 2015. “Medicaid as an investment in children: What is the long-term impact on tax receipts?” National Bureau of Economic Research Working Paper.

#povertyresearch

Welfare is a public policy concept in which government programs are introduced to help a society’s poor or disabled population reenter the workforce and care for themselves. This paper will take an in-depth look at the institution of welfare in the United States. Proceeding from a brief history of modern welfare programs, this essay will then review many of the issues that have arisen concerning this form of public policy as well as the ongoing attempts in Congress to correct these issues.

Keywords Aid for Families with Dependent Children (AFDC); Cash Transfer; Personal Responsibility & Work Opportunity Reconciliation Act (PRWORA); Welfare Dependency; Welfare State

Stratification

Welfare

Overview

In 1977, the budget director for the state of New York, Peter Goldmark, offered his thoughts regarding social welfare programs. "Welfare," he said, "is hated by those who administer it, mistrusted by those who pay for it and held in contempt by those who receive it." Goldmark was certainly not alone in his assessment of social welfare programs. Indeed, while the notion of using public funds to help the destitute get back on their feet is a noble concept for left-leaning idealists, in practical application, it has generated more controversy from both sides of the American political aisle than it has addressed poverty in the United States. In the latter twentieth century, this controversy became even more heated in light of two recessions, unpredictable economic development and subsequent budget austerity.

This paper will take an in-depth look at the institution of welfare in the United States. Proceeding from a brief history of modern welfare programs, this essay will then review many of the issues that have arisen concerning this form of public policy as well as the ongoing attempts in Congress to correct these issues.

A Brief History of Welfare in the United States

Welfare, a public policy concept in which government programs are introduced to help a society’s poor or disabled population reenter the workforce and care for themselves, is by no means a new idea. However, government was not always the primary donor to the poor — in the Middle Ages, the impoverished looked to churches and other charities for help rather than to political leaders.

While most societies viewed the poor in a negative light, in the sixteenth century, public attitudes concerning the poor began to change. In Great Britain, the introduction of the "English Poor Law" cast a light on the plight of the poor, calling for the reform of the impoverished population as well as eliminating poverty itself. The English Poor Law remained in effect for more than two and a half centuries. Its significance cannot be understated, as it represented a major shift in government policy toward the poor, creating institutions and programs designed to reduce the number of impoverished people and restore economic balance among the people (Slack, 1995).

While the English Poor Law cast a light on the need seen by many to help rather than isolate the impoverished, the stigma of poverty has persisted throughout history. An interesting change of attitude, however, occurred during the early twentieth century, when the stock market crashed in 1929.

The Depression

When Wall Street collapsed on what was coined "Black Tuesday," individual shareholders saw their holdings dwindle into negligible sums. However, the tumble was not limited to investors — assets of countless businesses also shrank, sending 11,000 banking institutions into insolvency. Within three years of Black Tuesday, stock market prices were 20 percent of what they were worth prior to 1929. Consumer confidence collapsed concurrently with the stock market, which meant production also fell off. By 1932, manufacturing output was halved, and up to 30 percent of the American workforce lost their jobs (Nelson, 2008).

The stigma of poverty was suddenly lifted during the Great Depression — there were simply too many members of the U.S. population who could be classified as below the poverty line to be considered social pariahs. The economic tumult of the Depression, the impotence of policymakers to rebuild economic institutions and systems and, above all, the increasing number of American poor vaulted Franklin Delano Roosevelt into the presidency in 1933. With his election came a mandate to help people get back to work.

Roosevelt introduced the "New Deal" while accepting the Democratic nomination for the presidency, and he made good on his vow upon entering office. In addition to filing legislation to stimulate industrial recovery and prevent future collapses from taking place, Roosevelt also pushed for unprecedented billions in federal spending to help create jobs and provide relief for the poor. While industrial and infrastructure recovery was an important part of this New Deal, the driving force behind the initiative was poverty relief and recovery. Political concerns were certainly expressed about the focus and effectiveness of this set of proposals, but in the face of public demands for relief, such concerns were marginalized (Bonatti & Thomsson, 2007).

In 1944, FDR also introduced the notion of a "Second Bill of Rights," which lent a philosophical ideal to his proposed policies. Stemming from his concept of the "four freedoms," freedom of speech, religion, fear and want, the Second Bill of Rights was designed to emphasize the latter of these freedoms by working to ensure that every individual had a right to make as comfortable a living as possible (Sunstein, 2006).

One of the longest-lasting aspects of Roosevelt's "welfare state" (a system in which the government assumes responsibility over the health, education, employment and social security of the people) was that of Social Security, which is used to help the handicapped and elderly remain free from want. Thirty years after the Roosevelt administration, the leadership team of President Lyndon Johnson took charge to build upon the legacy of FDR. Johnson managed to invest $6 billion in Medicare and another $1.3 billion in education reform appropriation. Johnson, addressing both U.S. Capitol chambers, declared a "war on poverty," prompting more people to get involved and the federal government to get more active in servicing the people's needs

In addition to his Medicare and education measures, Johnson's "war on poverty" included the introduction of the Head Start program, work study initiatives, food stamps, and the health care insurance program for the poor, Medicaid. In the years that immediately followed, Johnson's war seemed to be fomenting a return, as poverty levels dropped and living standards improved. Less than a decade later, however, poverty levels remained steady. In fact, Sheldon Danzinger of the University of Michigan said in 2004 that Americans have allowed poverty to again fall off the public's national agenda (Siegel, 2004).

Indeed, while the nobility of Roosevelt and Johnson reinvigorated the debate on the need to help the poor return to the rolls, there remains controversy about whether the government's role of managing the distribution of public funds to offset poverty is necessary. This paper will next look at the controversy over the modern welfare state.

Further Insights

Civic Responsibility or Budget Drain?

There are many different aspects of the American welfare state. As the definition provided earlier in this essay demonstrates, it is manifest in a broad range of areas. Most of these arenas are, however, somewhat benign in terms of their political sensitivity — after all, public education, Social Security and health care are universally applied programs. Alternatively, "welfare" more often than not evokes more attention from both advocates and critics alike, in large part because of the stigma that remains attached to the nation's poor. However, another critical factor is a simple matter of dollars and cents.

When one of the cornerstones of FDR's New Deal, the Aid for Dependent Children (as it was known then), was initiated, its payments to eligible children were only about $32 per month (equal to $360 today), and only one of three children actually received the benefit. By the 1960s, however, the program was renamed "Aid to Families with Dependent Children" (AFDC), and benefits were expanded to include grants for mothers. The benefit itself grew as well, a 60-percent increase in only twenty years. Furthermore, the number of people receiving the benefit more than doubled during the 1940–1960 timeframe. What was even more troubling to budget monitors was what...