Does the Earned Income Tax Credit Improve Health?

Poverty and health have a well-established relationship: lower socioeconomic status leads to worse health outcomes. Yet research has rarely tested the effectiveness of anti-poverty programs at improving health. In this paper, Jeannette Wicks-Lim and Peter Arno examine the health effects of the Earned Income Tax Credit (EITC), the largest anti-poverty program for working families operating throughout the U.S. The authors find that New York’s EITC program reduced the low birth weight rate in poor neighborhoods, an important health indicator. The study is the first to analyze EITC’s impact on neighborhoods, rather than households, and finds a concentrated health benefit in high poverty areas.

>> Read "Improving Population Health by Reducing Poverty: New York’s Earned Income Tax Credit"

A $15 U.S. Minimum Wage Without Job Losses Can Work

Pollin and Wicks-Lim examine whether U.S. fast-food businesses could adjust to an increase in the federal minimum wage from its current level of $7.25 per hour to $15 an hour without having to lay off workers.  They show how, through a four-year phase-in process, the fast-food industry could adjust to a $15 minimum wage without resorting to any layoffs or even cuts in profitability.  Rather, the fast-food industry could fully absorb the cost increases generated by a $15 minimum wage over the four-year period through a combination of turnover reductions along with modest increases in both sales growth and prices.

>>Read "A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs"

Did Quantitative Easing Lead to Bank Profits?

The rationale for the Federal Reserve’s Large Scale Asset Purchases—the biggest emergency economic stimulus in history, also known as “Quantitative Easing”—was to boost the economy after the 2007-8 financial crisis. Another explanation is that the Fed’s goal was to help its natural constituency: large banks. Authors Juan Antonio Montecino and PERI Co-Director Gerald Epstein examine transactions-level data on Fed purchases during the first phase of QE. They find that purchases of mortgage-backed securities led to significant increases in bank profits, and only mixed evidence that these were associated with increased lending. 

>> Read "Have Large Scale Asset Purchases Increased Bank Profits?"

Did the Obama Stimulus Work?

The 2009 American Recovery and Reinvestment Act (ARRA) was the most far-reaching experiment in fiscal stimulus in the history of the American economy. It was designed to raise GDP and employment. Did it work? Or did state governments save, rather than spend, their stimulus money? In this PERI working paper, Stephen A. Marglin and Peter M. Spiegler find that approximately two-thirds of every ARRA dollar was spent by the states. Further, they argue that ideological bias has informed previous evaluations of this politically charged program, and they call for a higher standard of empirical fidelity in future analyses.

>>Read “Did the State Pocket the Obama-Stimulus Money? Lessons from Cross-Section Regression and Interviews with State Officials”

The Job Opportunity Cost of War

There is a common perception that war is good for the economy. But in a paper for the Costs of War Project based at Brown University, PERI Assistant Research Professor Heidi Garrett-Peltier finds that war spending creates significantly fewer jobs than other kinds of government spending. Stimulating war-related activity, she writes, forgoes opportunities to stimulate other types of economic activities, including manufacturing clean energy, or expanding access to education. She found that war spending over the past 14 years has resulted in lost opportunities of between one and three million jobs.

Read “The Job Opportunity Cost of War”