Longer-Run Effects of Anti-Poverty Policies on Disadvantaged Neighborhoods

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We estimate the longer-run effects of minimum wages, the Earned Income Tax Credit, and welfare (and welfare reform) on key economic indicators of economic self-sufficiency in disadvantaged neighborhoods.  We find some evidence that higher minimum wages lead, in the longer run, to increases in poverty and the share of families on public assistance.  In contrast, we find some evidence that the EITC has positive longer-run employment effects.  We do not generally find significant evidence of longer-run effects of the EITC on poverty or public assistance in our standard difference-in-difference-in-differences specification.  But in some specifications, especially when we allow the national changes in the EITC to influence the estimates, we find evidence that the more generous EITC reduced poverty and the share on public assistance.  Finally, we find evidence that more generous welfare benefits lead to higher poverty and public assistance in the longer-run.

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