Sheldon Danziger

Fighting Poverty: What Works and What Doesn't.

Essays examine antipoverty policies of the last twenty years and discuss welfare, health care for the poor, job training, education programs, family structure, and civil rights.

Income Poverty in Advanced Countries

This chapter reviews definitional issues that arise in assessing the extent of, and change in, poverty in western industrialized countries, including the choice of resource, level of poverty line and appropriate adjustments for the size and type of the income-sharing unit. The chapter also reviews the existing empirical evidence and presents estimates using the Luxembourg Income Study database. The first-order iimpact of the public sector suggests that countries with similar rates of market income poverty can have very different poverty rates once taxes and transfers have been received. Cross-national evidence on longitudinal aspects of poverty suggests that much remains to be learned about the patterns of intra- and intergenerational poverty mobility and their covariates.

Labor Market Outcomes and the Transition to Adulthood

According to Sheldon Danziger and David Ratner, changes in the labor market over the past thirty-five years, such as labor-saving technological changes, increased globalization, declining unionization, and the failure of the minimum wage to keep up with inflation, have made it more difficult for young adults to attain the economic stability and self-sufficiency that are important markers of the transition to adulthood. Young men with no more than a high school degree have difficulty earning enough to support a family. Even though young women have achieved gains in earnings, employment, and schooling relative to men in recent decades, those without a college degree also struggle to achieve economic stability and self-sufficiency.The authors begin by describing trends in labor market outcomes for young adults—median annual earnings, the extent of low-wage work, employment rates, job instability, and the returns to education. Then they examine how these outcomes may contribute to delays in other markers of the transition to adulthood—completing an education, establishing independent living arrangements, and marrying and having children. They conclude that adverse changes in labor market outcomes are related to those delays but have not been shown to be the primary cause.Danziger and Ratner next consider several public policy reforms that might improve the economic outlook for young adults. They recommend policies that would increase the returns to work, especially for less-educated workers. They propose raising the federal minimum wage and adjusting it annually to maintain its value relative to the median wage. Expanding the Earned Income Tax Credit for childless low-wage workers, the authors say, could also raise the take-home pay of many young adult workers, with minimal adverse employment effects. New policies should also provide work opportunities for young adults who cannot find steady employment either because of poor economic conditions or because of physical and mental disabilities or criminal records that make it hard for them to work steadily even when the economy is strong. Finally, the authors recommend increasing federal Pell grants for college and improving access to credit for would-be college students to raise the educational attainment of young adults from low-income families.

The life-cycle hypothesis and the consumption behavior of the elderly

The life-cycle hypothesis (LCHO) is based on the common-sense idea that households do not make saving or dis saving decisions solely on the basis of their current income and wealth, but that they also take into account their expected future circumstances and are affected by their past experience. In particular, because people can anticipate that their incomes will fall sharply when they retire, they save when younger and dissave after retirement so as to maintain, more or less, their previous standards of living. This paper presents new data on income and consumption that are more appropriate for testing the LCHO than the data used in previous studies. Then we examine the average propensities to consume of the elderly and nonelderly and show how they do not accord with the LCHO. The LCHO predicts that the elderly dissave, or at least that they have a significantly higher average propensity to consume, at a given level of income, than the nonelderly. In fact, we found strong evidence to the contrary; i.e., the elderly not only do not dissave to finance their consumption during retirement, they spend less on consumption goods and services (save significantly more) than the nonelderly at all levels of income. Moreover, the oldest of the elderly save the most at given levels of income. After testing some adjustments that attempt to salvage the LCHO, we suggest alternative explanations for the observed higher average propensities to consume of the elderly.

Proximity and opportunity: How residence and race affect the employment of welfare recipients

Abstract This article examines the relationship between access to jobs, work activity, and welfare receipt. We hypothesize that welfare recipients who live in closer proximity to employment opportunities are more likely to work and less likely to remain on welfare than those who live farther away. To test this hypothesis, we analyze two unique data sets. The first has information on the residences and characteristics of welfare recipients; the second contains a list of the location of jobs in the three‐county Detroit metropolitan area in the late 1990s. We find that, after controlling for individual characteristics, greater proximity to employment opportunities is associated with both a higher probability of working and a higher probability of leaving welfare.

Wealth Disparities Before and After the Great Recession

The collapse of the labor, housing, and stock markets beginning in 2007 created unprecedented challenges for American families. This study examines disparities in wealth holdings leading up to the Great Recession and during the first years of the recovery. All socioeconomic groups experienced declines in wealth following the recession, with higher wealth families experiencing larger absolute declines. In percentage terms, however, the declines were greater for less advantaged groups as measured by minority status, education, and prerecession income and wealth, leading to a substantial rise in wealth inequality in just a few years. Despite large changes in wealth, longitudinal analyses demonstrate little change in mobility in the ranking of particular families in the wealth distribution. Between 2007 and 2011, one-fourth of American families lost at least 75 percent of their wealth, and more than half of all families lost at least 25 percent of their wealth. Multivariate longitudinal analyses document that these large relative losses were disproportionally concentrated among lower-income, less educated, and minority households.

The Measurement of Poverty: Implications for Antipoverty Policy

The Census Bureau released a report in April 1982 showing that if in-kind income from government programs--food stamps, subsidized school lunches, Public Housing, Medicare and Medicaid--is valued and added to money incomes, then poverty in 1979 was substantially less than the 11.1 percent of persons the Census had previously reported. This paper assesses the implications of that report for the measurement of poverty and for transfer policy. Then some evidence on the present level and recent trend in poverty is presented. This is followed by a discussion of how current antipoverty policy differs from that of the past fifteen years. Finally, some projections of poverty into the mid-1980s are offered. The Measurement of Poverty: Implications for Antipoverty Policy INTRODUCTION AND SUMMARY The Bureau of the Census (1982) has released a report showing that if in-kind income from government programs--food stamps, subsidized school lunches, public housing, Medicare and Medicaid--is valued and added to money incomes, then poverty in 1979 was substantially less than the 11.1 percent of persons the Census had previously reported. 1 The resulting estimates of the percentage of persons who are poor range from 6.4 to 9.8 percent, depending on which of the transfer benefits are included and how they are valued. 2 Many analysts concerned about the well-being of the poor have criticized the report, viewing it as an attempt to demonstrate that poverty is no longer a serious problem. Such skepticism is unwarranted for several reasons. First, it has long been recognized that programs like food stamps and subsidized housing increase the purchasing power of the poor even if they do not alter their cash incomes, and hence, the Census Bureaus official poverty statistics. Similar estimates for earlier years have been widely cited in the academic literature (Smeeding, 1975; Hoagland, 1982).3 Thus, the Census Bureau has merely responded to academic and Congressional criticism of the official statistics. Second, rationales for reducing social welfare expenditures are seriously challenged by the findings. The reports lowest estimate of poverty is derived by valuing all of the in-kind transfers listed above at their market cost and adding them to reported cash incomes. That 13.6 million people, 6.4 percent of the population, remain poor refutes the

Housing Instability Among Current and Former Welfare Recipients

OBJECTIVES We examined correlates of eviction and homelessness among current and former welfare recipients from 1997 to 2003 in an urban Michigan community. METHODS Longitudinal cohort data were drawn from the Womens Employment Study, a representative panel study of mothers who were receiving cash welfare in February 1997. We used logistic regression analysis to identify risk factors for both eviction and homelessness over the survey period. RESULTS Twenty percent (95% confidence interval [CI]=16%, 23%) of respondents were evicted and 12% (95% CI=10%, 15%) experienced homelessness at least once between fall 1997 and fall 2003. Multivariate analyses indicated 2 consistent risk factors: having less than a high school education and having used illicit drugs other than marijuana. Mental and physical health problems were significantly associated with homelessness but not evictions. A multivariate screening algorithm achieved 75% sensitivity and 67% specificity in identifying individuals at risk for homelessness. A corresponding algorithm for eviction achieved 75% sensitivity and 50% specificity. CONCLUSIONS The high prevalence of housing instability among our respondents suggests the need to better target housing assistance and other social services to current and former welfare recipients with identifiable personal problems.

Substance Use among Welfare Recipients: Trends and Policy Responses

Substance use by welfare recipients is frequently mentioned as a barrier to well‐being and social performance. This article uses nationally representative cross‐sectional data and Michigan‐specific panel data to summarize trends in substance use among AFDC/TANF recipients. It also examines the prevalence of substance dependence within the welfare population. Although almost 20 percent of welfare recipients report recent use of some illicit drug during the year, few satisfy criteria for drug or alcohol dependence as indicated by the short‐form Composite International Diagnostic Interview. The article concludes by considering policy responses to substance use disorders following welfare reform.

Do Working Wives Increase Family Income Inequality

This paper provides distribution-free inferences for testing marginal rank dominance and Lorenz, and generalized Lorenz dominances. Marginal dominances refer to ordinary dominance relationships holding between an income distribution and its dependent ...