Income and Child Well-Being. THIRTY-FOURTH GEARY LECTURE, 2005

My topic this afternoon is the link between family income and the well-being of children. While it is easy to document the better health and higher achievement of children who have grown up in richer as opposed to poorer families, it is much harder to isolate the causal impact of income itself. Children growing up in higher income families are advantaged in many other ways, including having parents who have completed more formal schooling and are embedded in higher-status social networks, and whose genetic endowments may provide cognitive and health-related advantages

The importance of poverty early in childhood

Introduction: Using a poverty line set at 60% of New Zealand’s median national income, nearly one in five New Zealand children (19%) was poor in 2011. This poverty rate is considerably less than that of the United States and Canada, similar to that of Australia, the United Kingdom, Germany and France, and much greater that in Scandinavian countries. These rates are far from immutable; New Zealand’s child poverty rate was much higher in 2004 before social policies were enacted which focused, in part, on the country’s child poverty problem

Single Mother Work and Poverty under Welfare Reform: Are Policy Impacts Different in Rural Areas?

During the 1990s, employment increased and poverty declined for single mothers in rural and urban areas. Our results suggest that, holding demographics constant, changes in welfare and social policy during this decade contributed to employment increases--but not to poverty reduction--for both rural and urban single mothers. If rural and urban demographics had been the same, the policy changes would have increased employment and reduced poverty more in rural areas. Without demographic controls, however, estimated policy impacts were no better in rural places. This suggests that rural demographic changes limited the policy impact on rural single-mother work and poverty.Demographics; Mothers; Policy; Single Mother; Welfare

"Whither the Middle Class'? A Dynamic View"

Research using cross-sectional survey 'snapshots' of household income taken over the past quarter century reveals a growing inequality in the distribution of annual money income of households in the United States (Thurow, 1987; Levy, 1987; Levy and Michel, 1991; Michel, 1991; Karoly, 1990; Center on Budget and Policy Priorities, 1990; Easterlin, MacDonald and Macunovich, 1990), prompting some to argue that the U.S. middle class is disappearing (Phillips, 1990; Bradbury, 1986). Aggregate data from the National Accounts and from wealth surveys (Wolff, 1989; Eargle, 1991) reinforce this conclusion by showing a growing share of income from capital, a falling share for earnings, and a slightly increasing concentration of wealth among upper-income groups. Also well-documented is greater inequality in the size distribution of earnings and wages in the late 1980s as compared to one or two decades before (GottschaLk and Danziger, 1989; Burtless, 1989; Blackbum et al., this volume). Despite the consistency of these results, their almost universal reliance on data drawn from cross-sectional snapshots leaves unanswered many important questions regarding the nature of the changes taking place in the distribution of income and wealth. Most importantly, cross-sectional snapshots provide information only on net changes in economic position and thus reveal little about the extent and nature of movement into and out of the middle class.. Are increasing numbers of families 'falling from grace', as Katherine Newman (1988) puts it? If so, who are they and what events are linked to their income losses? Or is mobility into the middle class declining? And, if so, does this affect in particular young families? What avenues for upward mobility are disappearing? These are the types of questions we seek to address for adults crossing either the lower or the upper boundary of the middle class. A second set of issues we address involves linkages between changes in income and changes in wealth. We analyze trends in the transitions of prime age (25-54 years old) adults into and out of the middle class using 22 years of data from the Panel Study of Income Dynamics. We begin by reviewing the methodology and measurement procedures that we employ to define the middle class and transitions into and out of middle-class status. Next we present our basic findings which, in fact, show a persistent 'withering' of the middle class since about 1980. We then search for clues as to who moved into and out of the middle-income groups and the source of such changes. Because notions of 'class' are usually based on measures of wealth as well as income, we also investigate longitudinal changes in the wealth distribution in the 1980s for these same individuals. Our findings on wealth reinforce those based on income. The paper concludes with a brief discussion of the policy implications of our findings.

Do generous social-assistance programs lead to dependence? A comparative study of lone-parent families in Germany and the United States

"Despite receiving much more generous benefits, German lone-parent social-assistance recipients receive benefits for no longer periods of time, on average, than do U.S. lone-parent recipients. We find several reasons for this. Social assistance is used more often in Germany as very short-term bridge funding prior to the beginning of receipt of social-insurance benefits such as unemployment compensation. German lone-parent recipients have older children-a characteristic that leads to shorter spells. Repeat spells are considerably more common in the United States. Our findings point out a number of problems with analyses of social-assistance dynamics based on individual spells." (author's abstract

Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption: The Case of American and Polish Data

The problem addressed in this article is the bias to income and expenditure elasticities estimated on pseudo-panel data caused by measurement error and unobserved heterogeneity. We gauge empirically these biases by comparing cross-sectional, pseudo-panel and true panel data from both Polish and American expenditure surveys. Our results suggest that unobserved heterogeneity imparts a downward bias to cross-section estimates of income elasticities of at-home food expenditures and an upward bias to estimates of income elasticities of away-from-home food expenditures. "Within" and first-difference estimators suffer less bias, but only if the effects of measurement error are accounted for with instrumental variables.individual and grouped data; unobserved heterogeneity; AIDS model

Measurement Error In Cross-Sectional and Longitudinal Labor Market Surveys: Results From Two Validation Studies

This paper reports evidence on the error properties of survey reports of labor market variables such as earnings and work hours. Our primary data source is the PSID Validation Study, a two-wave panel survey of a sample of workers employed by a large firm which also allowed us access to its very detailed records of its workers earnings. etc. The second data source uses individuals' 1977 and 1978 (March Current Population Survey) reports of earnings, matched to Social Security earnings records. In both data sets, individuals: reports of earnings are fairly accurately reported, and the errors are negatively related to true earnings. The latter property reduces the bias due to measurement error when earnings are used as an independent variable, but (unlike the classical-error case) leads to some bias when earnings are the dependent variable. Measurement-error-induced biases when change in earnings is the variable of interest are larger, but not dramatically so. Various measures of hourly earnings were much less reliable than annual earnings. Retrospective reports of unemployment showed considerable under-reporting, even of long spells.