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Using data from the Consumer Expenditure Survey and the March Current Population Survey, we calculate historical poverty estimates based on the new Supplemental Poverty Measure (SPM) from 1967 to 2012. During this period, poverty as officially measured has stagnated. However, the official poverty measure (OPM) does not account for the effect of near-cash transfers on the financial resources available to families, an important omission since such transfers have become an increasingly important part of government anti-poverty policy. Applying the SPM, which does count such transfers, we find that historical trends in poverty have been more favorable than the OPM suggests and that government policies have played an important and growing role in reducing poverty --- a role that is not evident when the OPM is used to assess poverty. We also find that government programs have played a particularly important role in alleviating child poverty and deep poverty, especially during economic downturns.

Zonder onderwerpscode: economie

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The transformation of the Child Tax Credit (CTC) into a more generous, inclusive monthly payment marks a historic (temporary) shift in U.S. treatment of low-income families. To investigate the initial impact of these payments, we apply a series of difference-in-difference estimates using Census Household Pulse Survey microdata collected from April 14 through August 16, 2021. Our findings offer three primary conclusions regarding the initial effects of the monthly CTC. First, payments strongly reduced food insufficiency: the initial payments led to a 7.5 percentage point (25 percent) decline in food insufficiency among low-income households with children. Second, the effects on food insufficiency are concentrated among families with 2019 pre-tax incomes below $35,000, and the CTC strongly reduces food insufficiency among low-income Black, Latino, and White families alike. Third, increasing the CTC coverage rate would be required in order for material hardship to be reduced further. Self-reports suggest the lowest-income households were less likely than higher-income families to receive the first CTC payments. As more children receive the benefit in future months, material hardship may decline further. Even with imperfect coverage, however, our findings suggest that the first CTC payments were largely effective at reducing food insufficiency among low-income families with children.

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We conduct a benefit-cost analysis of a U.S. child allowance, based on a systematic literature review of the highest quality available causal evidence on the short- and long-term effects of cash and near-cash transfers. In contrast to the previous studies we synthesize, which tend to measure a subset of benefits and costs available in a particular dataset, we establish a comprehensive accounting of potential effects and secure estimates of each. We produce core estimates of the benefits and costs per child and per adult of increasing household income by $1,000 in one year; these can be applied to value any cash or near-cash program that increases household income. Using microsimulation, we then apply these estimates to determine net aggregate benefits of three child allowance policies, including the expanded Child Tax Credit as enacted for the year 2021 in the American Rescue Plan (ARP). Our estimates indicate that making that expansion permanent would cost $97 billion per year and generate social benefits with net present value of $982 billion per year. Sensitivity analyses indicate that our estimates are robust to alternative assumptions and that all three child allowance policies we evaluate produce very high net returns for the U.S. population.