Abstract:This paper examines the response of safety net transfer and tax programs to earnings and income shocks across recessions since the early 1980s. Safety net programs in the United States are designed to dampen economic instability and maintain basic needs for families. Such programs, including TANF, SNAP (food stamps), and the Earned Income Tax Credit (EITC), have been tested during and between recessions of the past 30 years, including the recent 2007–2009 Great Recession. I use matched data in the March Curren… Show more
“…Income volatility—measured as the amount of change around mean income or by counts of large shocks (often losses) to income—has increased substantially since the 1970s, particularly for low‐income families (Dynan, Elmendorf, & Sichel, ; Gottschalk & Moffitt, ; Hardy & Ziliak, ; Morduch & Schneider, ; Morris, Hill, Gennetian, Rodrigues, & Wolf, ; Western et al, , ). This trend is consistent with the increasing instability of work, family structure, and public assistance for less‐educated adults during the same period (Cherlin, ; Farber, ; Hardy, ; Kalleberg, , ; Lambert, Fugiel, & Henly, ; Manning, Smock, & Majumdar, ). The causes of income changes and the fluctuations in resources have been shown to affect material hardship and adult and child outcomes (Gennetian et al, ; Hardy, ; Leete & Bania, ; Sandstrom & Huerta, ).…”
Objective: This study documents how income dynamics during childhood differ across racial/ethnic groups and among Hispanics by nativity, citizenship, and the English‐language proficiency of households.
Background: Income volatility has emerged as a distinct form of economic disadvantage that can impact family life and child well‐being. Yet little is understood about how income volatility is stratified by race and ethnicity.
Method: Using longitudinal data on children from the 2004 (n = 7,651) and 2008 (n = 12,183) panels of the Survey of Income and Program Participation, this study examined income level and volatility among Hispanic, non‐Hispanic White, and non‐Hispanic Black children.
Results: When compared with peers, Hispanic children were more likely to be low income, but experience slightly less income volatility. Income volatility among low‐income Hispanic children was similar regardless of the nativity or citizenship status of adults in the household, although it differed by household linguistic isolation. Receipt of social assistance offered less income stabilization for low‐income Hispanic children than for peers; however, household earnings, particularly from residential male adults (most of whom were fathers), had a stabilizing influence on income.
Conclusion: Income volatility is higher among low‐income families than among higher income families, irrespective of racial/ethnic status. At the lowest income levels, Hispanic children were statistically more likely than children of other racial/ethnic groups to experience slightly more stable income.
Implications: Understanding how different experiences of income volatility by children's race/ethnicity might influence family life and children's development can inform policy and program practice.
“…Income volatility—measured as the amount of change around mean income or by counts of large shocks (often losses) to income—has increased substantially since the 1970s, particularly for low‐income families (Dynan, Elmendorf, & Sichel, ; Gottschalk & Moffitt, ; Hardy & Ziliak, ; Morduch & Schneider, ; Morris, Hill, Gennetian, Rodrigues, & Wolf, ; Western et al, , ). This trend is consistent with the increasing instability of work, family structure, and public assistance for less‐educated adults during the same period (Cherlin, ; Farber, ; Hardy, ; Kalleberg, , ; Lambert, Fugiel, & Henly, ; Manning, Smock, & Majumdar, ). The causes of income changes and the fluctuations in resources have been shown to affect material hardship and adult and child outcomes (Gennetian et al, ; Hardy, ; Leete & Bania, ; Sandstrom & Huerta, ).…”
Objective: This study documents how income dynamics during childhood differ across racial/ethnic groups and among Hispanics by nativity, citizenship, and the English‐language proficiency of households.
Background: Income volatility has emerged as a distinct form of economic disadvantage that can impact family life and child well‐being. Yet little is understood about how income volatility is stratified by race and ethnicity.
Method: Using longitudinal data on children from the 2004 (n = 7,651) and 2008 (n = 12,183) panels of the Survey of Income and Program Participation, this study examined income level and volatility among Hispanic, non‐Hispanic White, and non‐Hispanic Black children.
Results: When compared with peers, Hispanic children were more likely to be low income, but experience slightly less income volatility. Income volatility among low‐income Hispanic children was similar regardless of the nativity or citizenship status of adults in the household, although it differed by household linguistic isolation. Receipt of social assistance offered less income stabilization for low‐income Hispanic children than for peers; however, household earnings, particularly from residential male adults (most of whom were fathers), had a stabilizing influence on income.
Conclusion: Income volatility is higher among low‐income families than among higher income families, irrespective of racial/ethnic status. At the lowest income levels, Hispanic children were statistically more likely than children of other racial/ethnic groups to experience slightly more stable income.
Implications: Understanding how different experiences of income volatility by children's race/ethnicity might influence family life and children's development can inform policy and program practice.
“…Over this same period, our social safety net has become less of a stabilizing force for low‐income families (Hardy, ), in part because benefits are often tied to employment and earnings (Hardy et al, ; Hill, Romich, Mattingly, Shamsuddin, & Wething, ; Hoynes & Schanzenbach, ). In addition, large and growing gaps in family wealth have left families with children, particularly Black and Hispanic families, at risk of having insufficient savings or assets to buffer against income changes (Charles & Hurst, ; Darity et al, ; Gibson‐Davis & Percheski, ; Hamilton & Darity, ; McKernan, Ratcliffe, Steuerle, & Zhang, ).…”
Section: Strengthening Social Programs To Promote Economic Stability mentioning
confidence: 99%
“…In addition, large and growing gaps in family wealth have left families with children, particularly Black and Hispanic families, at risk of having insufficient savings or assets to buffer against income changes (Charles & Hurst, ; Darity et al, ; Gibson‐Davis & Percheski, ; Hamilton & Darity, ; McKernan, Ratcliffe, Steuerle, & Zhang, ). … our social safety net has become less of a stabilizing force for low‐income families (Hardy, ), in part because benefits are often tied to employment and earnings (Hardy et al, ; Hill, Romich, Mattingly, Shamsuddin, & Wething, ; Hoynes & Schanzenbach, ).…”
Section: Strengthening Social Programs To Promote Economic Stability mentioning
Economic instability has increased in recent decades and is higher for families with low incomes and Black families. Such instability is thought to be driven primarily by precarious work and unstable family structure. In addition, the social safety net has become less of a stabilizing force for low‐income families, in part because benefits are often tied to employment and earnings. Too much change in economic circumstances may disrupt investments in children, parenting practices, and family routines—particularly if the economic changes are unpredictable, undesired, or not part of upward mobility. Given the considerable evidence that economic circumstances affect child health and development, economic stability can and should be an important goal of multiple policy domains. In this report, we describe economic instability, review the pertinent theories for considering how economic instability might matter to children, and describe ideas for policies that could reduce or moderate instability. We include policies that reduce instability in earnings, use public assistance to stabilize income or reduce material hardship, or enhance parents' capacity to deal with or avoid instability.
“…For example, inflation-adjusted spending on the Supplemental Nutrition Assistance Program (SNAP), the Earned Income Tax Credit (EITC), and the Additional Child Tax Credit (CTC) grew by 290, 59, and over 2200 % from 2000–2012, respectively. 1 In contrast, real spending on cash assistance from the Temporary Assistance for Needy Families (TANF) program declined, reflecting the transformation of the safety net away from cash-based assistance to one more reliant on refundable tax credits and in-kind food assistance (Bitler and Hoynes 2010; Hardy 2016; Moffitt 2013, 2015b; Ziliak 2015a). This spending pattern predated the Great Recession, suggesting that factors beyond the business cycle are potentially driving transfer program participation.…”
Refundable tax credits and food assistance are the largest transfer programs available to able-bodied working poor and near-poor families in the United States, and simultaneous participation in these programs has more than doubled since the early 2000s. To understand this growth, we construct a series of two-year panels from the 1981–2013 waves of the Current Population Survey Annual Social and Economic Supplement to estimate the effect of state labor-market conditions, federal and state transfer program policy choices, and household demographics governing joint participation in food and refundable tax credit programs. Overall, changing policy drives much of the increase in the simultaneous, biennial use of food assistance and refundable tax credits. This stands in stark contrast from the factors accounting for the growth in food assistance alone, where cyclical and structural labor market factors account for at least one-half of the growth, and demographics play a more prominent role. Moreover, since 2000, the business cycle factors as the leading determinant in biennial participation decisions in food programs and refundable tax credits, suggesting a recent strengthening in the relationship between economic conditions and transfer programs.
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