Longer-Run Effects of Anti-Poverty Policies on Disadvantaged Neighborhoods

50 Pages Posted: 5 Nov 2018

See all articles by David Neumark

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Brian Asquith

Upjohn Institute

Brittany Bass

University of California, Irvine - Department of Economics

Date Written: November 2018

Abstract

We estimate 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. Our strongest findings are twofold. First, the longer-run effects of the EITC are to increase employment and to reduce poverty and public assistance, as long as we rely on national as well as state variation in EITC policy. Second, tighter welfare time limits also reduce poverty and public assistance in the longer run; while the effect on public assistance result may be mechanically related to loss of benefits, the effect on poverty is more likely behavioral. It is harder to draw firm conclusions about minimum wages and welfare benefits. With some specifications and samples, the evidence suggests that higher minimum wages lead to longer-run declines in poverty and the share of families on public assistance, whereas higher welfare benefits have adverse longer-run effects. However, the evidence on minimum wages and welfare benefits is not robust – and the estimated effects of minimum wages are sometimes in the opposite direction, including when we restrict the analysis to more recent data that is likely of more interest to policymakers.

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Suggested Citation

Neumark, David and Asquith, Brian and Bass, Brittany, Longer-Run Effects of Anti-Poverty Policies on Disadvantaged Neighborhoods (November 2018). NBER Working Paper No. w25231. Available at SSRN: https://ssrn.com/abstract=3278531

David Neumark (Contact Author)

University of California, Irvine - Department of Economics ( email )

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HOME PAGE: http://www.socsci.uci.edu/~dneumark/

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Brian Asquith

Upjohn Institute ( email )

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United States

HOME PAGE: http://www.brianjamesasquith.com

Brittany Bass

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States

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