Working Paper: NBER ID: w22682
Authors: Marianne Bitler; Hilary Hoynes; Elira Kuka
Abstract: In this paper, we comprehensively examine the effects of the Great Recession on child poverty, with particular attention to the role of the social safety net in mitigating the adverse effects of shocks to earnings and income. Using a state panel data model and data for 2000 to 2014, we estimate the relationship between the business cycle and child poverty, and we examine how and to what extent the safety net is providing protection to at-risk children. We find compelling evidence that the safety net provides protection; that is, the cyclicality of after-tax-and-transfer child poverty is significantly attenuated relative to the cyclicality of private income poverty. We also find that the protective effect of the safety net is not similar across demographic groups, and that children from more disadvantaged backgrounds, such as those living with non-Hispanic black or Hispanic, single, or particularly immigrant household heads-or immigrant spouses, experience larger poverty cyclicality than non-Hispanic white, married, or native household heads with native spouses. Our findings hold across a host of choices for how to define poverty. These include measures based on absolute thresholds or more relative thresholds. They also hold for measures of resources that include not only cash and near cash transfers net of taxes but also several measures of medical benefits.
Keywords: child poverty; social safety net; Great Recession; economic cycles; unemployment
JEL Codes: I3; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unemployment Rate (J64) | Child Poverty Rate (I32) |
| Unemployment Rate (J64) | Private Income Poverty Rate (D31) |
| Unemployment Rate (J64) | After-tax-and-transfer Child Poverty Rate (H29) |
| Social Safety Net (I38) | Mitigation of Child Poverty (I32) |
| Demographic Factors (J11) | Differential Impact on Child Poverty (I32) |