We examine how the well-being of those with few resources changed, amidst economic disruption and large, transitory government transfers. We find that in the years leading up to the pandemic and in 2020, the patterns for income and consumption poverty were very similar. In 2021 and 2022, however, changes in income and consumption poverty were quite different—consumption poverty fell less than income poverty in 2021, and then income poverty rose sharply in 2022 while consumption poverty continued to decline. Reports of hardships rose in 2022 for both families with and without children, suggesting increased concern about financial well-being as COVID-era transfer programs expired. A key difference between income and consumption measures appears to be saving during the pandemic followed by dissaving, even among those near the poverty line. This finding indicates that permanent income models can even be relevant when low-income households, that typically have very limited saving, receive very large transitory payments. Unlike past academic studies and numerous politicians and pundits that have attributed most of the decline in income poverty in 2021, and its subsequent rise in 2022, to the Child Tax Credit, we show that expanded Unemployment Insurance and stimulus payments played a larger role.
Authors
- Acknowledgements & Disclosure
- We would like to thank Kevin Corinth, Anthony Tatarka, Scott Winship, and Derek Wu for quick and valuable comments and Aaron Hong, Connor Murphy, and Anthony Tatarka for their excellent research assistance. The Peter G. Peterson Foundation and the Stand Together Trust provided financial assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33052
- Pages
- 70
- Published in
- United States of America
Table of Contents
- NBER WORKING PAPER SERIES 1
- POVERTY HARDSHIP AND GOVERNMENT TRANSFERS 1
- Bruce D. Meyer Jeehoon Han James X. Sullivan 1
- Working Paper 33052 httpwww.nber.orgpapersw33052 1
- NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge MA 02138 October 2024 1
- Poverty Hardship and Government Transfers Bruce D. Meyer Jeehoon Han and James X. Sullivan NBER Working Paper No. 33052 October 2024 JEL No. E21 H23 H30 I38 2
- Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago IL 60637 and NBER bdmeyeruchicago.edu 2
- Jeehoon Han Department of Economics Baylor University One Bear Place 98003 Waco TX 76798 jeehoonhan3gmail.com 2
- James X. Sullivan Department of Economics 3108 Jenkins Nanovic Halls University of Notre Dame Notre Dame IN 46556 James.X.Sullivan.197nd.edu 2
- I. Introduction 3
- II. Background on Policy Changes 5
- III. Prior Work on Economic Well-being during the Pandemic 6
- IV. Data and Methods 12
- Measures of Consumption and Income 12
- Adjusting for Under-reporting of UI benefits 15
- Measuring Poverty 16
- Data on Hardship 17
- V. Results 17
- Changes in Poverty 17
- Understanding the Differences between Changes in Income and Consumption Poverty 20
- Changes in Hardship 26
- The Effects of COVID Era Policies on Poverty 28
- VI. Discussion and Conclusions 32
- VII. References 34
- Improving the Measurement of Consumer Expenditures 34
- Measuring Poverty A New Approach 35
- AEA Papers and Proceedings 35
- Social Indicators Research 35
- Journal 36
- Monthly Labor Review 36
- Brookings Papers on Economic Activity 37
- Journal of Policy Analysis and 37
- Management 37
- National Tax Journal 37
- Journal of Public Economics 38
- Journal of Economic Perspectives 38
- The Journal of Human Resources 39
- Canadian Journal of EconomicsRevue Canadienne déconomique 39
- Brookings Papers on Economic Activity 39
- Journal of 39
- Political Economy 39
- Journal of Policy Analysis 39
- Journal of Policy 39
- Analysis and Management 39
- Economic Commentary Federal 41
- Reserve Bank of Cleveland 41
- Nature Communications 41
- Methods Appendix 42
- EIP 42
- CTC 43
- SNAP 45
- Energy subsidy 45
- School lunch 45
- WIC 45
- Housing Subsidies 46
- Vehicle Service Flows 47
- 𝑥𝑥 𝛽𝛽 47
- 𝛼𝛼 exp𝑥𝑥 𝛽𝛽 𝛼𝛼 exp𝑥𝑥 𝛽𝛽 𝑦𝑦 exp𝑥𝑥 𝛽𝛽 47
- 𝛿𝛿 𝛿𝛿 𝛽𝛽 48
- Real Reported Purchase Price δ 1 δ 𝑡𝑡 48
- Rental Equivalent of Public or Subsidized Housing 48
