Despite the established relationship between adverse health outcomes and low socioeconomic status, researchers rarely test the link between health improvements and poverty-alleviating economic policies. New research, however, links individual-level health improvements to the Earned Income Tax Credit (EITC), a broad-based income support policy. We build on these findings by examining whether the EITC has ecological, neighborhood-level health effects. We use a difference-in-difference analysis to measure child health outcomes in 90 low- and middle- income neighborhoods before and after the expansion of New York State and New York City’s EITC policy between 1997-2010. Our study takes advantage of the relatively exogenous source of income variation supplied by the EITC—legislative changes to EITC policy parameters. This feature minimizes the endogeneity problem in studying the relationship between income and health. Our estimates link a 15-percentage-point increase in EITC benefit rates to a 0.45 percentage-point reduction in the low birthweight rate. We do not observe any measurable link between EITC benefits and prenatal health or asthma-related pediatric hospitalization. The magnitude of the EITC’s impact on low birthweight rates suggests ecological effects, and an additional channel through which anti-poverty measures can serve as public health interventions.
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JEL CODE: J38ABSTRACT: This paper considers the extent to which U.S. fast-food businesses could adjust to an increase in the federal minimum wage from its current level of $7.25 per hour to $15 an hour without having to resort to reducing their workforces. We consider this issue through a set of simple illustrative exercises, whereby the U.S. raises the federal minimum wage in two steps over four years, first to $10.50 within one year, then to $15 after three more years. We conclude that the fast-food industry could absorb the increase in its overall wage bill without resorting to cuts in their employment levels at any point over this four-year adjustment period. Rather, we find that the fast-food industry could fully absorb these wage bill increases through a combination of turnover reductions; trend increases in sales growth; and modest annual price increases over the four-year period. Working from the relevant existing literature, our results are based on a set of reasonable assumptions on fast-food turnover rates; the price elasticity of demand within the fast-food industry; and the underlying trend for sales growth in the industry. We also show that fast-food firms would not need to lower their average profit rate during this adjustment period. Nor would the fast-food firms need to reallocate funds generated by revenues away from any other area of their overall operations, such as marketing.We are grateful to Daniel Aaronson for his comments on a previous draft and for sharing results from some of his own preliminary research.
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In comparison with other wealthy countries, the U.S. spends a substantially higher proportion of its gross domestic product on healthcare. However, despite higher spending in the U.S., not all Americans have healthcare coverage, in contrast to the universal systems in other countries. While the Affordable Care Act has expanded healthcare coverage in the U.S., there were still nearly 30 million uninsured Americans in 2018. One policy proposal to transform the U.S. healthcare system is to expand the Medicare program from covering just the elderly to covering all Americans, regardless of age-Medicare for All. If implemented, this policy would establish the federal government as the country's single healthcare payer, providing comprehensive coverage for all Americans. In this Point/Counterpoint column, I ask two researchers to share their views on the wisdom of implementing a Medicare for All policy. Jeannette Wicks-Lim, Associate Research Professor at the Political Economy Research Institute of the University of Massachusetts at Amherst, presents estimates showing how Medicare for All would translate into lower aggregate healthcare expenditures while it expands coverage to all Americans. She specifically contrasts the elements of her Medicare for All cost estimates with competing cost estimates that imply Medicare for All would increase U.S. healthcare costs. Joseph Minarik, Senior Vice President and Director of Research at the Committee for Economic Development of The Conference Board, is dubious about the benefits of Medicare for All and cites several factors that would increase costs of care under such a policy. He prefers that the U.S. reform the existing Affordable Care Act and pursue additional changes to the healthcare system that rely on competing private health plans to achieve expanded care with better controlled costs. ACKNOWLEDGMENT I thank Kevin Kelly of Mathematica for his outstanding help in organizing the Point/Counterpoint section.
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