Monday, Nov 3
Melvin Stephens, Estimating Program Benefits
Using the Panel Study of Income Dynamics we construct a post-tax, post-transfer measure of income to estimate long-term childhood poverty rates (LTCP) among black and white children in the 1970s, 1980s, and 1990s. We calculate the black/white gap in LTCP for each cohort and examine the demographic and economic contributions to changes in this gap for the most recent cohorts. Finally, we decompose the income packages of long-term poor families to examine changes in income composition over time. We find that the LTCP rate increased for black and white children from the 1970s to 1980s. From the 1980s to 1990s LTCP declined for white children but remained stable for black children. As a result, the race gap in LTCP grew in the 1990s with black children almost 20 times more likely to be long-term poor than white children. We show that the widening of the race gap is due to the stronger association between employment and long-term poverty status in the 1990s. The proportion of long-term poor children’s family income derived from the EITC increased slightly in the 1990s, while the proportion of income from welfare and father’s wages declined.