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The Role of Welfare in Family Income Inequality: 1968–2016

Citation

Wagmiller, Robert L.; Lee, Kristen Schultz; & Su, Jessica Houston (2020). The Role of Welfare in Family Income Inequality: 1968–2016. Children and Youth Services Review, 119, 105615. PMCID: PMC8009496

Abstract

Income inequality among U.S. families with children has increased over recent decades, coinciding with a period of significant reforms in federal welfare policy. In the most recent reform eras, welfare benefits were significantly restructured and redistributed, which may have important implications for income inequality. Using data from the 1968–2016 March Supplement to the Current Population Survey (N = 1,192,244 families with children) merged with data from the historical Supplemental Poverty Measure, this study investigated how income inequality and, relatedly, the redistributive effects of welfare income and in-kind benefits changed, and whether such changes varied across states with different approaches to welfare policy. Results suggest that cash income from welfare became less effective at reducing income inequality after the 1996 welfare reform, because the share of income coming from cash welfare fell and was also less concentrated among the neediest families. At the same time, tax and in-kind benefits reduced inequality until the Great Recession. Consistent with the “race to the bottom” hypothesis, results suggest that the redistributive effects of welfare income dropped in all states regardless of their approach to welfare policy.

URL

https://doi.org/10.1016/j.childyouth.2020.105615

Reference Type

Journal Article

Article Type

Regular

Year Published

2020

Journal Title

Children and Youth Services Review

Author(s)

Wagmiller, Robert L.
Lee, Kristen Schultz
Su, Jessica Houston

PMCID

PMC8009496

Data Set/Study

March Supplement to the Current Population Survey
Supplemental Poverty Measure

Continent/Country

United States of America

State

Nonspecific