We document the demographic and economic forces underlying changes in income inequality among single mother families over the past three decades in the United States. Using decomposable measures of after-tax income-to-needs inequality, we examine within- and between-group inequality based on education attainment, age, past marital status, race, and employment status. We also conduct income factor decompositions to quantify the relative contributions of earnings, transfers, other income, and taxes to inequality.
The federal Earned Income Tax Credit (EITC) has proven to be the most effective anti-poverty program for working low-income families in the United States. Established in 1975 to offset payroll taxes and to provide a modest supplement to low wages, the EITC is now a $40 billion program serving over 20 million Americans.
In this paper I exploit the fact that the social and economic reforms over the past two decades differentially affected the opportunity costs of non-participation in work, welfare, and disability programs for single mothers across different birth-year and education cohorts. This cohort variation in after-tax wages and transfer benefits is used to identify own- and cross-price elasticities of demand for and substitution across wage, welfare, and disability income over 1979 to 2001 in the Current Population Survey.
The Food Stamp Program provides assistance to households with incomes and assets below fixed thresholds. Although it is the largest entitlement program in the social safety net, little is known about the effect of food stamps on stabilizing fluctuations in household income and consumption. To estimate the volatility of income and the attendant reduction in volatility due to food stamps we use data from the Panel Study of Income Dynamics over 1980-1999 along with a model of income that admits permanent and transitory components as well as random growth rate heterogeneity.