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Poverty and Income Inequality

Safety Net Growth Since the 1990s Has Not Reached the Poorest Children

Growing up in poverty can harm a child’s health and long-term financial outcomes. The federal government invests over $200 billion in programs aimed at alleviating child poverty, which also benefits the broader economy by reducing public costs. But a working paper by IPR director and economist Diane Whitmore Schanzenbach finds that expansions of the social safety net since 1990 have gone almost exclusively to families with working parents and those with earnings above the poverty level. Additionally, spending on children as a share of total spending in the national economy has remained relatively flat. Schanzenbach and co-author Hilary W. Hoynes write that the availability of social safety net programs to low-income children has fallen, which could lead to worse outcomes in adulthood. Broadening the safety net will lead to many important benefits for individuals, including improved health, academic performance, and economic security. Schanzenbach suggests policymakers consider the long-term benefits of investments in children, which are not fully measured today but can be seen later in life. Schanzenbach is the Margaret Walker Alexander Professor.

Do Food Deserts Drive Nutritional Inequality?

Many believe that food deserts, or areas with limited access to healthy food, cause lower-income individuals to eat less healthy food than those with a higher income. In the Quarterly Journal of Economics, IPR economist Molly Schnell and her colleagues examined whether food deserts are the driving force behind nutritional inequality—and if adding new supermarkets near low-income households would decrease it. Using the Nielsen Homescan Panel for 2004–16 to measure household grocery purchases, the researchers established that low-income households purchased food that is less healthy than higher-income ones. They then looked at how the opening of 6,721 U.S. supermarkets between 2004 and 2016 affected purchases. The researchers discovered that opening supermarkets in food deserts closes less than 1.5% of the gap in nutritional consumption between high and low-income households. Since the majority of low-income Americans living in food deserts already traveled outside of their neighborhood to shop at supermarkets, adding a new supermarket did not change what they bought as much as where they shopped. Additional analyses demonstrate that offering low-income shoppers the same products at the same prices as high income shoppers would only reduce nutritional inequality by about 10%. The remaining 90% is driven by differences in demand. Schnell and her colleagues suggest that because demand, not supply, drives nutritional inequality, income-based aid for healthy groceries would be more effective at increasing low-income households’ healthy eating, though such aid should be studied further.