Hilary Hoynes of the University of California, Berkeley, Diane Whitmore Schanzenbach of Northwestern University and Douglas Almond of Columbia University have found
that low-income children who benefited from the program were healthier and more likely to be working decades later than otherwise similar children in counties where the program arrived later.
But the emerging body of evidence on the supply-side benefits of certain programs does mean
that the specific structure of a given program matter, and policy makers shouldn’t take for granted that the trade-offs around the social safety net always point in the same direction.
Receiving unemployment insurance, for example, appears to make people slower to find new work, and the Congressional Budget Office projects
that the Affordable Care Act will lead to fewer adults working because they can more easily obtain health care without having an employer.
The clearest example of a program that appears to increase labor supply
and hence the United States’ economic potential is the earned-income tax credit (E. I.T.
“But maybe we will, as that body of evidence develops.”
The United States and other advanced nations are struggling to emerge from a pattern of persistently low growth, an
era when many prime-age people aren’t in the labor force at all and productivity gains have been weak for years.
It’s a pretty straightforward equation that when government intervention makes child care services cheaper
than they would otherwise be, people who might otherwise stay home raising their children instead work.
But also important is that a variety of social welfare programs introduced
and expanded since the 1960s have now been around long enough, often with periodic changes to their structure, to allow for an analysis of their long-term effects.