Panel Survey Of Income Dynamics Research Articles

The effect of hurricanes on mental health over the long term

Existing causal studies examining the impact of hurricanes on health and health-related outcomes typically focus on short-run impacts and specific outcomes associated with physical health. In this paper, I explore the long-term effects of Hurricanes Katrina and Rita on the mental health of adults using two individual-level datasets from the Behavioral Risk Factor Surveillance System and the Panel Survey of Income Dynamics. Difference-in-differences models are used to estimate the long-run causal impact of hurricanes. I compare the mental health of adults living in Katrina and Rita affected counties to those in other counties before and after the hurricanes. My findings suggest that the hurricanes increased the number of poor mental health days by 0.49 days per 30 days (14.5 %) during a seven-year post period (2006–2012) and psychological distress by 0.46 K-6 points (15.2 %) during a six-year post period. I also find that the estimated effects were notably larger among specific sub-groups, such as single mothers and black respondents. These results are robust to different sample and functional form specifications. From a policy perspective, these findings suggest that long-lasting effects need to be included in any analysis of the impact of hurricanes in order to capture their full effect.

Heterogeneity of consumption responses to income shocks in the presence of nonlinear persistence

In this paper we use the enhanced consumption data in the Panel Survey of Income Dynamics (PSID) from 2005–2017 to explore the transmission of income shocks to consumption. We build on the nonlinear quantile framework introduced in Arellano et al. (2017). Our focus is on the estimation of consumption responses to persistent nonlinear income shocks in the presence of unobserved heterogeneity. To reliably estimate heterogeneous responses in our unbalanced panel, we develop Sequential Monte Carlo computational methods. We find substantial heterogeneity in consumption responses, and uncover latent types of households with different life-cycle consumption behavior. Ordering types according to their average log-consumption, we find that low-consumption types respond more strongly to income shocks at the beginning of the life cycle and when their assets are low, as standard life-cycle theory would predict. In contrast, high-consumption types respond less on average, and in a way that changes little with age or assets. We examine various mechanisms that might explain this heterogeneity.

Structural Inequities in the Kin Safety Net: Mapping the Three-Generational Network throughout Early Adulthood1.

Research in the intergenerational transmission of socioeconomic status (SES) consistently shows that the SES of one generation benefits the next. Demographic processes shape the kin structures that serve as conduits for the transmission of SES. Few studies have examined these trends together to describe experiences in evolving kin structures throughout the life course and across generations. This article applies demographic techniques to fertility, marital, and mortality data from three generations in the Panel Survey of Income Dynamics to simulate the amount of time young adults would spend within consequential kin structures. High-SES adults spend more years of their young adulthood in advantageous kin structures with greater potential for kin support and capital accumulation, while low-SES adults spend a larger portion of their young adulthoods as single parents, sandwiched between widowed parents and children, and as adult orphans. The kin network inequities have grown since the 1980s, driven by lagging mortality improvements and increasing single parenthood among low-SES families.

Black–White disparities in nuclear family trajectories and parents' postsecondary transfers to adult children

AbstractObjectiveThis study uses a life course perspective to investigate Black–White disparities in how nuclear family structures (i.e., parents' romantic union statuses and coresidential arrangements with children) are linked with postsecondary financial transfers.BackgroundIn the United States, both parents' nuclear family experiences and postsecondary transfers are stratified along racial lines. Prior research suggests that racial disparities in nuclear family experiences, however, are not key drivers of the gap in parental postsecondary transfers. The small role that nuclear family structure plays in shaping the Black–White gap in postsecondary transfers may result from heterogeneity in the consequences of such structures across racial groups, though this heterogeneity remains untested.MethodUsing the Panel Survey of Income Dynamics (https://psidonline.isr.umich.edu/) and sequence analysis techniques, this study documents seven common family trajectories experienced by American parents (N = 7289). It employs two‐part models to assess whether the association between parents' trajectories and the likelihood/magnitude of postsecondary transfers differs for Black and White parents.ResultsResults suggest that White parents who are continuously in two‐biological‐parent families or who experience long‐term re‐partnering are more likely to make postsecondary transfers than Black parents in similar family trajectories. These racial disparities, however, disappear when parents experience trajectories marked by singlehood or nonresidence with children.ConclusionsNuclear family structures matter less for structuring transfers for Black parents in part because gains from romantic partnerships are concentrated among Whites. Implications for reproductions of racial inequalities are discussed.

Households' Balance Sheets and the Effect of Fiscal Policy

AbstractUsing households' balance‐sheet composition in the Panel Survey of Income Dynamics, we identify six household types. Since 1999, there has been a decline in the share of patient households and an increase in the share of impatient households with negative wealth. Using a six‐agent New Keynesian model with search and matching frictions, we explore how changes in households' shares affect the transmission of government spending shocks. We show that the relative share of households in the left tail of the wealth distribution plays a key role in the aggregate marginal propensity to consume, the magnitude of fiscal multipliers, and the distributional consequences of government spending shocks. While the output and consumption multipliers are positively correlated with the share of households with negative wealth, the size of the employment multiplier is negatively correlated. Moreover, our calibrated model can deliver jobless fiscal expansions.

Household characteristics or neighborhood conditions? Exploring the determinants of housing spells among U.S. public housing residents

Designed as a temporary housing option for low-income individuals, public housing has often been argued to be a permanent home for many of its residents. Longer durations of time spent on housing assistance have led to debates around public housing as more of a cause than an effect of poverty spells. This article analyzes the determinants of exit among public housing residents. Using a sample from the Panel Survey of Income Dynamics, this article ascertains the individual characteristics and neighborhood factors associated with longer spell durations. The results suggest that most public housing residents exit public housing in the first 5 years. In terms of individual characteristics, spell length, age and income played a modest role in understanding public housing exits. In addition, neighborhoods with higher levels of poverty and median household income had significant positive effects on the odds of exiting public housing. However, the effect sizes of household characteristics and neighborhood conditions were relatively small when considering the post-1996 era of policy reform. The results suggest that public housing exits may largely be due to shifts in housing policy and social welfare programs rather than household characteristics and neighborhood conditions.

A life course perspective on BMI in rural America.

Rural Americans are substantially more likely to be obese than their urban counterparts. A life course perspective offers insights into how growing up in rural areas may affect weight in young adulthood. Using data from the Panel Survey of Income Dynamics, this study follows the residential trajectories of 3157 respondents since birth. Living in a rural area during the critical period of early childhood (before age two) is predictive of higher BMI, while residence in later childhood and adolescence is not. Improving the health and wellbeing of rural mothers and infants could potentially help address the roots of rural obesity.

Another Look at Location Affordability: Understanding the Detailed Effects of Income and Urban Form on Housing and Transportation Expenditures

ABSTRACT Findings from a study using the Panel Survey of Income Dynamics (PSID) and detailed urban environment and transit data support the location affordability hypothesis. Households in location-efficient places spent significantly less on household transportation, enough to offset high housing costs. Walkable blocks and good transit especially contribute to these savings. But households with very low incomes (below 35% AMI) do not see significant enough savings. Authors recommend investments in transit, sidewalks, and economic development in disinvested areas; the preservation and creation of affordable housing of all types and tenures; and more supports for households with very low incomes. For decades, researchers have explored how location efficiency (LE) affects housing affordability, including incorporating transportation costs into a holistic housing affordability measure known as location affordability. Others have argued that estimated transportation savings from LE may be overstated because of limits in data and methods. Smart and Klein’s 2018 article in Housing Policy Debate analyzed the PSID and found “no evidence to support the location affordability hypothesis.” Considering their study’s policy implications, as well as its methodological limitations, we tested the PSID data at a smaller geography using more detailed household and urban form variables, per the LE literature. With this approach, we find statistically significant and meaningful transportation cost differences that are enough to offset higher housing prices for several income groups. However, the transportation savings for households in the lowest-income group in urban areas do not offset high housing costs. Because location-affordable places are in short supply, and the extreme shortage of affordable housing, both housing and transportation investments are needed to support households with low and moderate incomes. Expanding location affordability regionally will also help to address climate change and expand access to job opportunities, goods, services, and other amenities.

Lifetime Burden of Adult Congenital Heart Disease in the USA Using a Microsimulation Model.

Congenital heart defects (CHD) represent a growing burden of illness among adults. We estimated the lifetime health, education, labor, and social outcomes of adults with CHD in the USA using the Future Adult Model, a dynamic microsimulation model that has been used to study the lifetime impacts of a variety of chronic diseases. We simulated a cohort of adult heads of households > 25years old derived from the Panel Survey of Income Dynamics who reported a childhood heart problem as a proxy for CHD and calculated life expectancy, disability-free and quality-adjusted life years, lifetime earnings, education attainment, employment, development of chronic disease, medical spending, and disability insurance claiming status. Total burden of disease was estimated by comparing to a healthy cohort with no childhood heart problem. Eighty-seven individuals reporting a childhood heart problem were identified from the PSID and were used to generate the synthetic cohort simulated in the model. Life expectancy, disability-free, quality-adjusted, and discounted quality-adjusted life years were an average 4.6, 6.7, 5.3, and 1.4years lower than in healthy adults. Lung disease, cancer, and severe mental distress were more common compared to healthy individuals. The CHD cohort earned $237,800 less in lifetime earnings and incurred higher average total medical spend by $66,600 compared to healthy individuals. Compared to healthy adults, the total burden of CHD is over $500K per adult. Despite being among the healthiest adults with CHD, there are significant decrements in life expectancy, employment, and lifetime earnings, with concomitant increases in medical spend.

Households' Balance Sheets and the Effect of Fiscal Policy

Using households' balance sheet composition in the Panel Survey of Income Dynamics, we identify six household types. Since 1999, there has been a decline in the share of patient households and an increase in the share of impatient households with negative wealth. Using a six-agent New Keynesian model with search and matching frictions, we explore how changes in households' shares affect the transmission of government spending shocks. We show that the relative share of households in the left tail of the wealth distribution plays a key role in the aggregate marginal propensity to consume, the magnitude of fiscal multipliers, and the distributional consequences of government spending shocks. While the output and consumption multipliers are positively correlated with the share of households with negative wealth, the size of the employment multiplier is negatively correlated. Moreover, our calibrated model can deliver jobless fiscal expansions.

Reconsidering poverty dynamics by analyzing housing spells

This note reconsiders Bane and Ellwood’s (1986) research on poverty spells. Instead of focusing on cash benefits as a form of public assistance, this note uses time periods on housing assistance as an alternative way to understand poverty dynamics. Housing expenses are the largest costs for families throughout the United States. Using data from the Panel Survey of Income Dynamics from 1987 to 2011, this note undertakes an alternative methodological technique for understanding the dynamics of poverty spells: calculating the probabilities of exiting public housing through analyzing spell durations. The results suggest that most individuals that enter public housing tend to have spells of less than 5 years. Moreover, only 12% of the original sample live in public housing for more than 10 years. Given the precarity of public assistance for low-income populations, scholars must consider alternative ways to understand how long and to what extent people live in poverty.

Semiparametric estimation of the canonical permanent‐transitory model of earnings dynamics

This paper presents identification and estimation results for a flexible state space model. Our modification of the canonical model allows the permanent component to follow a unit root process and the transitory component to follow a semiparametric model of a higher‐order autoregressive‐moving‐average (ARMA) process. Using panel data of observed earnings, we establish identification of the nonparametric joint distributions for each of the permanent and transitory components over time. We apply the identification and estimation method to the earnings dynamics of U.S. men using the Panel Survey of Income Dynamics (PSID). The results show that the marginal distributions of permanent and transitory earnings components are more dispersed, more skewed, and have fatter tails than the normal and that earnings mobility is much lower than for the normal. We also find strong evidence for the existence of higher‐order ARMA processes in the transitory component, which lead to much different estimates of the distributions of and earnings mobility in the permanent component, implying that misspecification of the process for transitory earnings can affect estimated distributions of the permanent component and estimated earnings dynamics of that component. Thus our flexible model implies earnings dynamics for U.S. men different from much of the prior literature.

White Integration or Segregation? The Racial and Ethnic Transformation of Rural and Small Town America

Rural America has seemingly been “left behind” in an era of massive immigration and growing diversity. The arrival of new immigrants has exposed many rural whites, perhaps for the first time, to racial and ethnic minority populations. Do rural whites increasingly live in racially diverse nonmetropolitan places? Or is white exposure to racially diverse populations expressed in uneven patterns of residential integration from place to place? We link microdata from the Panel Survey of Income Dynamics (1989–to–2009 waves) to place data identified in the 1990–2010 decennial censuses. We estimate multilevel, fixed–effects models of rural white exposure to minority populations that involve linking individual predictors to changing demographic and economic local environments. Using entropy scores, our analyses highlight the extraordinary rise since 1990 in exposure of all rural populations, including whites, to racially diverse communities. Variation in white exposure to rural minorities is driven primarily by changing local demographic and economic conditions. Net of individual background characteristics, whites are significantly less likely to live in racially diverse places than other ethnoracial groups. White population growth is occurring disproportionately in the least racially diverse rural communities. For blacks and other minorities, growth is taking place disproportionately in the most racially diverse places.

Racial Differentials in the Wealth Effects of the Financial Crisis and Great Recession

The financial crisis of 2007–2009 was arguably the most severe financial crisis in American history and the subsequent Great Recession was the worst economic downturn in the USA since the Great Depression. In this paper, we analyze data from the Panel Survey of Income Dynamics (PSID) to examine the effects of the crisis and recession on the wealth of White and Black families using graphical, cross section, and panel empirical models. While other studies have measured the short-term effects of the crisis and recession on American household wealth, we are able to look at longer-term wealth effects by incorporating data from the recently released 2015 wave of the PSID. Our results indicate that the negative consequences of the economic downturn on Black families’ wealth were severe and longer-lasting than for White families.

Household's Balance Sheets and the Effect of Fiscal Policy

Using the Panel Survey of Income Dynamics, we identify six household types as a function of their balance sheet composition. Since 1999, there has been a decline in the share of patient households and an increase in the share of impatient households with negative wealth. Using a DSGE model with search and matching frictions, we explore how changes in the distribution of households affect the transmission of government spending shocks. We show that the relative share of households in the left tail of the wealth distribution plays a key role in the aggregate marginal propensity to consume, the magnitude of the fiscal multipliers, and the distributional consequences of fiscal shocks. While the output and consumption multipliers are positively correlated with the share of households with negative wealth, the size of the employment multiplier is negatively correlated. For calibrations based on the empirical household weights after the Great Recession, our model delivers jobless fiscal expansions.

How Much Income Do Retirees Actually Have? Evaluating the Evidence from Five National Datasets

Recent research by Bee and Mitchell (2017) has refocused attention on the fact that the Current Population Survey (CPS) underestimates retirement income. In the wake of this study, some observers have questioned whether other surveys more frequently used by retirement researchers also understate retirement income and, if so, whether prior research suggesting that many households are unprepared for retirement is accurate. This paper addresses both questions by examining retirement income data from the CPS and four other surveys: 1) the Survey of Consumer Finances (SCF); 2) the Health and Retirement Study (HRS); 3) the Panel Survey of Income Dynamics (PSID); and 4) the Survey of Income and Program Participation (SIPP). The paper compares the income measures from each survey to administrative data from tax and Social Security records, both in aggregate and across the income distribution. It then uses a common measure of retirement income adequacy, the replacement rate, to assess overall household preparedness for retirement.

Nonparametric heteroskedasticity in persistent panel processes: An application to earnings dynamics

This paper considers a dynamic panel model where a latent state variable follows a unit root process with nonparametric heteroskedasticity. We develop constructive nonparametric identification and estimation of the skedastic function. Applying this method to the Panel Survey of Income Dynamics (PSID) in the framework of earnings dynamics, we found that workers with lower pre-recession permanent earnings had higher earnings risk during the three most recent recessions.

JOB MOBILITY AND EARNINGS INSTABILITY

There is still no consensus on the causes of the increase in the variance of transitory earnings (earnings instability) in the United States. It is difficult to attribute the rise in instability to job mobility because there is no evidence of a concurrent increase in job turnover or separations. Using an error component model of the covariance structure of earnings on Panel Survey of Income Dynamics and Survey of Income and Program Participation data, this study shows that job mobility and the increase in the variance of wage changes upon job change accounts for a substantial part of the increase in earnings instability. The empirical evidence is consistent with the simulations of a search and matching model where an increase in the variance of productivity shocks increases on‐the‐job search and earnings instability among job changers while leaving job turnover approximately constant. (JEL J21, J31)

Inheriting wealth in America: future boom or bust?

Chapter 1. Introduction to the Book 1.1 Prologue 1.2 Overview and plan of the book Chapter 2. Background Material 2.1 Literature review on inheritances 2.2 Household Wealth Trends, 1983 to 2010 Chapter 3. Inheritances and the Distribution of Wealth Or Whatever Happened to the Great Inheritance Boom? 3.1. Introduction 3.2. Data sources and methods 3.3 Empirical findings, 1989 - 2007 3.4 Summary and concluding remarks Appendix to Chapter 3: Questions on Wealth Transfers and Work History in the Survey of Consumer Finances Questionnaire Chapter 4. An Examination of Inheritances Using the Panel Survey of Income Dynamics 4.1 Introduction 4.2 Patterns of inheritances 4.3 Do inheritances substitute for other savings? 4.4 Concluding remarks Chapter 5. Wealth Accumulation by Age Cohort: The Role of Savings, Capital Gains and Intergenerational Transfers 5.1 Introduction 5.2 The accounting framework 5.3 Data sources and descriptive statistics 5.4 Simulation model of wealth changes by age group 5.5 Simulation results 5.6 Concluding remarks Appendix to Chapter 5: Sources and Methods Used in the Construction of Savings Rates by Age Group, 1983 to 2007 Chapter 6. Conclusions and Policy Recommendations 6.1 Summary and concluding remarks 6.2 Policy recommendations

Earnings Volatility Trends and the Great Moderation: A Multifactor Residual Approach

To explore trends in idiosyncratic income volatility, this paper employs a multifactor residual model to extract macroeconomic factors from individual changes in wages and total family income. The data used in this analysis is a subset of the persistently employed from the Panel Survey of Income Dynamics (PSID). Using this subset expands the income volatility literature by bridging an existing gap between studies using the PSID and others using a continuous work history sample. Improved aggregate economic conditions can explain much of the reduction in unconditional income volatility that took place during the Great Moderation, lasting from the mid-1980s into the 2000s. However, macro factors appear to be making larger contributions to individual and household income volatility following the recent rise in GDP volatility. In contrast, idiosyncratic volatility of income, that which remains after accounting for macroeconomic factors, has generally remained consistent. The stability of idiosyncratic income volatility suggests employment changes in the recent crisis were cyclical rather than structural.