Unequal by Design: Socioeconomic Inequalities and State Level Safety Nets, 1994-2012

• In Event: 047 - Section on Inequality, Poverty and Mobility Paper Session. Inequality, Poverty, and Mobility

Abstract

This paper analyzes the trends in social provision provided by the safety net for low-income families, examines the extent of state variation in this provision, and assesses the impact on low-income households from 1994 to 2012. The analyses examine the distributive inequalities in what low-income families receive and the likelihood of receipt in different programs and jurisdictions, and assesses the impact of these state-level policies on household poverty and inequality. We find that there have been dramatic changes in safety net programs over time in terms of inclusiveness and adequacy. These changes represent meaningful changes for what families can expect in their time of need. We also find that there is substantial state variation in many safety net programs. To examine the distributional effects, we compare the contributions of four redistribution policy mechanisms (centralized transfers, decentralized transfers, state taxes, and Federal taxes) to the reduction in market-generated income inequality and changes in the household income package using data from the March CPS. We find that the working-aged households with children are the most reliant on the state-based safety net (taxes and transfers), whereas the elderly are relatively advantaged in their treatment by the tax and transfer system because of their reliance on federally-based programs. In examining how the safety net has changed over time, we find that the redistributive mechanisms relied on primarily by the working-aged households with children have deteriorated their redistributive capacity the most, resulting in this population experiencing the greatest contraction in government assistance since 1994.

Authors

• Sarah K. Bruch, University of Iowa

• Marcia K. Meyers, University of Washington