Bruch concludes aff
Sarah K. Bruch et al 23, associate professor at the Joseph R. Biden, Jr., School of Public Policy and Administration and the Department of Sociology and Criminal Justice at the University of Delaware. Joseph van der Naald is a doctoral candidate in the sociology program at the Graduate Center of the City University of New York. Janet Gornick is a professor of political science and sociology at the Graduate Center of the City University of New York. She also serves as director of the James M. and Cathleen D. Stone Center on Socio-Economic Inequality, which includes the US office of LIS (the cross-national data archive in Luxembourg). Social Service Review. “ Poverty Reduction through Federal and State Policy Mechanisms: Variation over Time and across the United States” May 2. https://www.journals.uchicago.edu/doi/full/10.1086/724556#d21216324e4057 //pipk
First, market- and disposable-income poverty rates vary across states, but we see greater cross-state variation in disposable-income poverty than in market poverty. When only accounting for market income, the percentage of households with children who fall under the poverty threshold ranges from a high of 28 percent in Mississippi to a low of 9 percent in Minnesota (a cross-state range of 19 percentage points; see fig. 3). Looking at disposable-income poverty, the extent of cross-state variation declines from a high of 13 percent in Louisiana to a low of 3 percent in Minnesota (a cross-state range of 10 percentage points). A similar pattern is found for households without children: market-income poverty ranges from 30 percent in West Virginia and Mississippi to 11 percent in North Dakota and New Hampshire (a cross-state range of 19 percentage points); disposable-income poverty ranges from 23 percent in Mississippi to 7 percent in New Hampshire (a cross-state range of 16 percentage points).
Figure 3.
Figure 3. Absolute market- and disposable-income poverty by state, 2016, for (A) working-age households with children and (B) working-age households without children. States ordered highest (top) to lowest (bottom) by market-income poverty. The left side of each horizontal bar shows the state-level disposable-income poverty rate, and the right side of the bar captures the state-level market-income poverty rate. The length of the bar thus illustrates the total absolute poverty reduction attributable to the four mechanisms. Detailed estimates provided in table A3 for households with children and table A4 for households without children. Results that do not include the TRIM3 benefit underreporting adjustments for state transfers are available in figure A1, table A7 for households with children, and table A8 for households without children. TRIM3 = Urban Institute’s Transfer Income Model.
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Second, the total poverty reduction varies considerably across states. Looking first at absolute poverty reductions, we observe an important pattern for households with and without children: greater poverty reductions in states with higher levels of market poverty (see fig. 3). For example, Mississippi has the highest percentage of households with children in market-income poverty, and it also has the largest absolute poverty reduction (15 percentage points). Similarly, for households without children, West Virginia has the highest percentage of households in market-income poverty and also the largest absolute poverty reduction (11 percentage points). This pattern, in part, helps to explain why we observe a smaller degree of cross-state variation in disposable-income poverty levels compared with market-income poverty.
However, a different picture emerges if we examine relative poverty reductions. For both household types, we see that although there are large cross-state differences in the percentage of market-income poverty reduced, states with the highest rates of market-income poverty do not have the largest percentage reductions (see fig. 4). In fact, in the case of households with children, the state with the lowest rate of market-income poverty (Minnesota) has the highest relative reduction—reducing fully 73 percent of market-income poverty. Whereas in the state with the highest rate of market-income poverty (Mississippi), 54 percent of market-income poverty is reduced, and the two states with the smallest poverty reduction (North Dakota and Arizona, both with 45 percent) have very different levels of market-income poverty (12 and 22 percent, respectively). We can observe a similar pattern for households without children (see fig. 4). For example, although Alaska has the largest relative poverty reduction (43 percent), it is in the bottom quarter of states in terms of market-income poverty. These patterns suggest that the degree to which market-income poverty is reduced is not simply a function of market-income poverty but also other factors, including state-level differences in the poverty reduction efficacy of different policy mechanisms.
Figure 4.
Figure 4. Relative poverty reduction by state, 2016, for (A) working-age households with children and (B) working-age households without children. States ordered highest (top) to lowest (bottom) by percentage of market poverty reduced (relative poverty reduction). Length of the bar illustrates the total relative poverty reduction attributable to the four mechanisms. Detailed estimates provided in table A5 for households with children and table A6 for households without children. Results that do not include the TRIM3 benefit underreporting adjustments for state transfers are available in figure A2, table A9 for households with children, and table A10 for households without children. TRIM3 = Urban Institute’s Transfer Income Model.
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Third and finally, the poverty reduction attributable to each policy mechanism varies across states, whether examined as an absolute reduction or percentage reduction of market-income poverty (see figs. 5 and 6). As we found at the national level, for households with children, state transfers reduce poverty the most, followed by federal taxes. We can see that the extent of poverty reduction attributable to these mechanisms varies quite a bit across states: for state transfers, the absolute reduction ranges from .03 to .08 and the relative reduction from 18 to 49 percent of market poverty; for federal taxes, the absolute reduction ranges from .02 to .07 and the relative reduction from 10 to 37 percent of market poverty. Looking at how these state-specific poverty reductions are associated with state-level market- and disposable-income levels, we find stronger associations between market-income poverty and these two mechanisms (state transfers 𝑟=.76
; federal taxes 𝑟=.83
), but only slightly weaker associations between disposable-income poverty and these mechanisms (state transfers 𝑟=.56
; federal taxes 𝑟=.75
).
Figure 5.
Figure 5. Average absolute poverty reduction attributed to redistributive mechanisms by state, 2016, for (A) working-age households with children and (B) working-age households without children. States ordered highest (top) to lowest (bottom) by market-income poverty. Positive estimates indicate reduction; negative estimates indicate mechanisms increasing poverty (as is the case with the Federal Insurance Contributions Act [FICA]). Detailed estimates provided in table A3 for households with children and table A4 for households without children. Results that do not include the TRIM3 benefit underreporting adjustments for state transfers are available in figure A3. TRIM3 = Urban Institute’s Transfer Income Model.
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Figure 6.
Figure 6. Average relative poverty reduction attributed to redistributive mechanisms by state, 2016, for (A) working-age households with children and (B) working-age households without children. States ordered highest (top) to lowest (bottom) by percentage of market poverty reduced (relative poverty reduction). Positive estimates indicate reduction; negative estimates indicate mechanisms increasing poverty (as is the case with the Federal Insurance Contributions Act [FICA]). Detailed estimates provided in table A5 for households with children and table A6 for households without children. Results that do not include the TRIM3 benefit underreporting adjustments for state transfers are available in figure A4. TRIM3 = Urban Institute’s Transfer Income Model.
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Turning to households without children, we also observe a pattern consistent with the national level, finding that federal transfers reduce poverty the most. Like the cross-state variability findings for households with children, we find considerable cross-state variation in the poverty reduced by this mechanism: the absolute reduction ranges from .02 to .11, and the relative reduction ranges from 13 to 43 percent of market poverty. In terms of how these poverty reductions are associated with state-level market- and disposable-income levels, we find stronger associations between market-income poverty (𝑟=.87
) compared with disposable-income poverty (𝑟=.74
). These patterns suggest that although the cross-state variations in poverty reduction attributable to the redistributive mechanisms are strongly related to levels of market- and disposable-income poverty, they also likely reflect compositional differences within these household types in addition to state-level differences in approaches to poverty.