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In the Papers: A Look at the First Major Government-Sponsored Welfare Program

Every Monday, the National Bureau of Economic Research, a nonprofit organization made up of some of North America’s most respected economists, releases its latest batch of working papers. The papers aren’t peer-reviewed, so their conclusions are preliminary (and occasionally flat-out wrong). But they offer an early peek into some of the research that will shape economic thinking in the years ahead. Here are a few of this week’s most interesting papers:

Title: “The Long Term Impact of Cash Transfers to Poor Families”

Authors: Anna Aizer, Shari Eli, Joseph Ferrie, Adriana Lleras-Muney

What they found: Cash transfers to poor families boost their children’s education, income and life expectancy.

Why it matters: Many welfare programs are designed primarily to benefit children, yet evaluating their success can be difficult because their full impact takes decades to emerge and because there are so many variables that it’s hard to know what would have happened to children without the program. The authors look at the first major government-sponsored welfare program in the U.S., the Mother’s Pension program, which ran from 1911 to 1935. They find that sons of families accepted into the program lived a year longer on average than those from rejected families. Sons also attended 0.4 years more school and earned 14 percent more in adulthood.

Key quote: “We conclude that cash transfers to poor families during the first part of the twentieth century ameliorated early life conditions enough to improve both medium- and long-term outcomes of boys growing up in poverty. While conditions today differ significantly from those at the beginning of the twentieth century, [suggesting] caution in drawing conclusions as to the anticipated impact of cash transfers in the twenty-first century, […] these results suggest that targeted cash transfers are also likely to improve lifetime outcomes today.”

Data they used: Administrative records from the Mother’s Pension program linked to Census Bureau and other government data.


Title:  “The Effect of Public Insurance Coverage for Childless Adults on Labor Supply”

Authors: Laura Dague, Thomas DeLeire, Lindsey Leininger

What they found: The availability of government-provided health insurance makes childless adults significantly less likely to work.

Why it matters: The Affordable Care Act, better known to some as “Obamacare,” significantly expanded Medicaid eligibility to adults without dependent children. Economists, including those at the Congressional Budget Office, have suggested the expansion could make some people less likely to work, because they will no longer need a job to get health insurance. The authors use data from Wisconsin, where the government initially expanded health coverage, then froze the program, effectively creating “treatment” and “control” groups. They find people who received coverage were between 2 and 10 percentage points less likely to be employed than those who didn’t get coverage.

Key quote: “In light of these results, policymakers should be prepared for a reduction in labor supply among childless adults affected by the Medicaid expansion under the Affordable Care Act. These labor supply effects may be sufficiently large to be noticeable economy wide.”

Data they used: Administrative data from Wisconsin’s BadgerCare Plus program.


Title: “The Effect of School Finance Reforms on the Distribution of Spending, Academic Achievement, and Adult Outcomes”

Authors: C. Kirabo Jackson, Rucker Johnson, Claudia Persico

What they found: School finance-reform efforts have led to more equal funding for education, which has, in turn, helped students from poor families stay in school longer and earn more in adulthood.

Why it matters: Because most of the country funds public education through local property taxes, school districts in affluent areas have historically spent far more on a per-student basis than ones in lower-income areas. Various programs have aimed to address the issue, but it hasn’t been clear how successful those efforts have been in either reducing inequality or improving student outcomes. The authors use newly released spending data to conclude that the programs have indeed reduced inequality in funding, and that court-ordered reforms have been more effective than legislative ones. They also find that increases in spending lead to higher graduation rates among students from poor families, as well as higher earnings and reduced poverty when those students reach adulthood. They find no impact for students from nonpoor families.

Key quote: “These results provide compelling evidence that the [school finance reforms] of the 1970s through 2000s had important effects on the distribution of school spending and the subsequent socioeconomic well-being of affected students. Importantly, the results also speak to the broader question of whether money matters. … Many have questioned whether increased school spending can really help improve the educational and lifetime outcomes of children from disadvantaged backgrounds. The results in this paper demonstrate that it can.”

Data they used: Historical Database on Individual Government Finances, the Local Education Agency (School District) Finance Survey and the Panel Study of Income Dynamics, among other sources

Ben Casselman was a senior editor and the chief economics writer for FiveThirtyEight.