Signe-Mary McKernan

How Much Does the Supplemental Nutrition Assistance Program Reduce Food Insecurity

Nearly 15% of all U.S. households and 40% of near-poor households were food insecure in 2009. The Supplemental Nutrition Assistance Program (SNAP) is the cornerstone of federal food assistance programs and serves as the first line of defense against food-related hardship. This paper measures the effectiveness of SNAP in reducing food insecurity using an instrumental variables approach to control for selection. Our results suggest that receipt of SNAP benefits reduces the likelihood of being food insecure by roughly 30% and reduces the likelihood of being very food insecure by 20%.

Effects of Food Stamp and TANF Policies on Food Stamp Receipt

This article uses data from the period between 1996 and 2003 to measure how the food stamp receipt of a low‐income population is affected by specific Food Stamp Program (FSP) policies, welfare policies, the minimum wage, and the Earned Income Tax Credit. It examines 27 specific program rules that are hypothesized to affect food stamp receipt. The results provide strong evidence that food stamp receipt increases with leniency of vehicle exemption policies, leniency of immigrant eligibility rules, length of recertification periods, and expansion of categorical eligibility. Findings also suggest that food stamp receipt is reduced by the use of biometric technology, which is employed in part to prevent fraud. In addition, the results provide some, but less consistent, evidence that the electronic benefit transfer program and outreach spending increase food stamp receipt.

Do Racial Disparities in Private Transfers Help Explain the Racial Wealth Gap? New Evidence From Longitudinal Data

How do private transfers differ by race and ethnicity, and do such differences explain the racial and ethnic disparity in wealth? Using the Panel Study of Income Dynamics, this study examines private transfers by race and ethnicity in the United States and explores a causal relationship between private transfers and wealth. Panel data and a family-level fixed-effect model are used to control for the endogeneity of private transfers. Private transfers in the form of financial support received and given from extended families and friends, as well as large gifts and inheritances, are examined. We find that African Americans and Hispanics (both immigrant and nonimmigrant) receive less in both types of private transfers than whites. Large gifts and inheritances, but not net financial support received, are related to wealth increases for African American and white families. Overall, we estimate that the African American shortfall in large gifts and inheritances accounts for 12 % of the white-black racial wealth gap.

Customer Experience with Rent-to-Own Transactions

The authors examine the characteristics and experiences of rent-to-own customers using a nationwide survey of 532 customers and 11,575 noncustomers. The authors find that most customers have low incomes and education levels, but most have a motor vehicle and some type of credit card or bank account; most customers use rent-to-own transactions to purchase merchandise, not merely as short-term rentals; and most customers are satisfied with the transactions and are treated well if they are late making a payment, though some experience abusive collection practices. The authors discuss the implications of the findings for public policy.

Use of the Formal and Informal Financial Sectors: Does Gender Matter? Empirical Evidence from Rural Bangladesh

Access to transfers and credit, whether cash or in-kind, is a major source of poverty alleviation and income generation in many developing countries around the world. Women may especially benefit from transfers and credit in countries such as Bangladesh, where they often have few work alternatives. In this paper, the authors descriptively examine the formal and informal financial sectors of rural Bangladesh, placing special emphasis on differences between men and women. Their analysis uses unique data on the credit and transfer behaviors of 1,800 households in rural Bangladesh. The authors focus on five important questions: a) How important are the formal and informal financial sectors? b) What are the primary sources of gifts and loans within those sectors? c) Do men and women rely on different sources for finances (for example, formal versus informal) or different types of finances (for example, transfers versus loans)? d) How have the financial sectors evolved during the 1990s? e) What is the relationship between the formal and informal sectors?

Prohibitions, price caps, and disclosures: A look at state policies and alternative financial product use

This study uses nationally representative data from the 2009 National Financial Capability State-by-State Survey to examine the relationship between state-level alternative financial service (AFS) policies (prohibitions, price caps, disclosures) and consumer use of five AFS products: payday loans, auto title loans, pawn broker loans, refund anticipation loans, and rent-to-own transactions. Looking across products rather than at one product in isolation allows a focus on patterns and relationships across products. The results suggest that more stringent price caps and prohibitions are associated with lower product use and do not support the hypothesis that prohibitions and price caps on one AFS product lead consumers to use other AFS products.

The Effects of Holding Assets on Social and Economic Outcomes of Families: A Review of Theory and Evidence

This report examines the effects of asset-holding and asset accumulation on individuals and families from theoretical and empirical perspectives. The report pays special attention to the way assets affect low-income families, while recognizing that research on this topic is limited. The goal of the report is to distill the main findings from the vast theoretical and empirical literature on how assets influence economic and social well-being. The first step is to present a conceptual framework based largely on our classification of existing literature in economics, psychology, and sociology. The second step is to bring together the empirical findings relevant to the categories specified in the conceptual framework. The report concludes with suggestions for future research, especially related to the role of assets in the lives of low-income families.

The Effects of Welfare and IDA Program Rules on the Asset Holdings of Low-Income Families

This report examines the effects of a comprehensive set of 13 welfare, Food Stamp, individual development account (IDA), earned income tax credit (EITC), and minimum wage program rules on the asset holdings of low-education single mothers and families. This report finds empirical evidence that more lenient asset limits in means-tested programs and more generous IDA program rules may have positive effects on asset holdings of low-education single mothers and families.

Empirical Evidence on the Determinants of Rent-to-Own Use and Purchase Behavior

This study uses logit and multinomial logit models and data from a nationwide random sample of rent-to-own (RTO) customers to investigate financial, demographic, regulatory, and other factors associated with consumer use of RTO transactions and the purchase of RTO merchandise. The analysis recognizes that RTO transactions can be used for either the purchase of merchandise or a temporary rental and models the determinants of use and purchase separately for each group of customers. The study concludes that income, access to credit, education, and race are significant determinants of whether consumers use RTO transactions with the intent to purchase. The study also finds some indication that state RTO laws may affect use and purchase, although this result is less robust. The determinants differ for consumers entering RTO transactions intending to purchase and intending a temporary rental, suggesting the industry serves two separate and distinct markets. The policy implications are discussed.

Child Poverty and its Lasting Consequence

One in six newborns were born poor over the past 40 years, and nearly half remained poor half their childhoods. These persistently poor children are nearly 90 percent more likely than never-poor children to enter their 20s without completing high school and are four times more likely to give birth outside of marriage during their teenage years. Children whose parents did not complete high school are less likely to complete high school themselves. This paper examines the magnitude of child poverty, family characteristics related to childhood poverty persistence, and childhood poverty’s lasting consequences.