Examines the potential costs and benefits associated with implementing a variety of measures, such as minimum wage increases, expanded access to housing vouchers, and refundable child tax credits, specifically with regards to their effect on the national child poverty rate, using a simulation method.

The resource aims to predict the outcome of implementing a number of proposed childhood poverty reducing policies suggested by the Children’s Defense Fund (CDF). Its authors note that this is important given that “a large portion of US children live in poverty—22 percent according to the official measure, and 18 percent according to the Census Bureau’s Supplemental Poverty Measure (SPM). The SPM shows that child poverty is alleviated by the current safety net, but despite those benefits child poverty has risen over the last decade” (p.v).

Nine proposed policies aimed at reducing the childhood poverty rate are considered, including a transitional jobs program for unemployed and underemployed individuals with children, increased SNAP benefits for families, and an expanded Earned Income Tax Credit, among others. According to the report’s authors, all of the proposed polices, “have the potential to directly improve families’ economic well-being in the same year that the policies are implemented (as opposed to policies such as improved education with the potential to improve children’s well-being in the medium to longer term)” (p.vi).

In order to calculate the costs and benefits associated with these policies, the resource authors “analyzed [them] by applying a microsimulation model—the Transfer Income Model, version 3 (TRIM3)—to a large representative sample of US households—the Census Bureau’s Current Population Survey, Annual Social and Economic Supplement (CPS-ASEC). The TRIM3 model is a comprehensive and detailed model that can capture both the current operations of tax and benefit programs and the potential impacts of changes to those programs, which has been used for both national and state-level analyses of the antipoverty impact of taxes and benefits…The analysis used the CPS-ASEC data that captured families’ incomes and employment during 2010. [The authors] applied the TRIM3 model to the survey data to estimate the economic circumstances of families with children before any of the proposed policies, after each policy individually, and after all policies combined” (p.vi).

(Abstractor: Author and Website Staff)

Full publication title: Reducing Child Poverty in the US: Costs and Impacts of Policies Proposed by the Children’s Defense Fund

Major Findings & Recommendations

The resource first examines the effect of all nine policies combined. It states that, “considering all the policies in combination, the impacts on poverty were as follows: • Overall, the number of children in poverty in 2010 according to the SPM is estimated to fall from 10.9 million to 4.3 million due to the CDF-proposed policies—a drop of 60 percent. • Among the children who are not raised out of poverty by the policy package, the great majority—4 million—nevertheless see an increase in family economic resources. • The poverty gap for families with children—the aggregate amount of money by which the incomes of poor families with children fall below their poverty thresholds—fell from $40.5 billion to $15.0 billion, a drop of 63 percent” (p.vi-vii). The resource then considers the effect of the nine policies individually. It has a variety of findings, including the following: • “Transitional jobs program: This was the most effective of the policies focused on cash income…Child poverty falls by 10.7 percent from this one policy” (p.viii). • “Expanded access to housing vouchers for low-income households with children: This was the most effective individual policy, reducing poverty by 21 percent” (p.viii). • “Fully refundable Child Tax Credit: Of the three changes to tax credits, this change had the greatest antipoverty impact. It allowed an additional 4.4 million tax units to receive the credit, and increased the credit available to others, reducing child poverty by 11.6 percent” (p.viii). The resource sums up its findings by noting that “considering both the number of children in poverty and the poverty gap, the impact of the package as a whole is much larger than the impact of any individual policy. Different policies address the needs of children living in different circumstances. For example, while several policies focus on parents who are already employed, the transitional jobs policy would assist parents and guardians who are currently unemployed or underemployed, and the increases to SNAP benefits and housing vouchers are not tied to employment” (p.ix). (Abstractor: Author and Website Staff)