Incentives,challenges, and dilemmas of TANF: A case study

This paper compares the incentives inherent in TANF (Temporary Assistance for Needy Families), the U.S. welfare system in place after the 1996 reforms, with those of TANF's predecessor, AFDC (Aid to Families with Dependent Children), using the experience in one state, Wisconsin, as an example. Is the new program successful in avoiding the “poverty trap” of the old welfare system, in which the marginal tax rates imposed on earnings and benefits were so high that they discouraged work effort outside a narrow earnings range? As women receiving assistance begin working more hours and earning more, income‐conditioned benefits (Food Stamps, EITC, Medicaid, and subsidies for child care) are reduced and withdrawn, in effect constituting a “tax” on earnings. Under TANF, there is more support for these families, at least in Wisconsin, and so economic well‐being should be higher for most women with earning in this range than it was under AFDC. But marginal tax rates under TANF remain high, and in some income ranges they are higher than under AFDC. Once in the work force, former TANF recipients have earnings over the long run that expose them to very high marginal tax rates, which decrease the benefits of working harder and make it very difficult to gain full eonomic independence. Evidence from other sources suggest that most low‐skilled women have earnings in the same range and so are likely to face similar reductions in benefits such as child care subsidies or the EITC as their earnings increase, even if they are not receiving welfare‐related benefits. © 2002 by the Association for Public Policy Analysis and Management.     

The Influence of Low‐Income Children's Participation in Head Start on Their Parents’ Education and Employment

Head Start is the oldest and largest federally funded preschool program in the United States. From its inception in 1965, Head Start not only provided early childhood education, care, and services for children, but also sought to promote parents’ success. However, almost all evaluation studies of Head Start have focused solely on children's cognitive and social outcomes rather than on parents’ outcomes. The present study examines whether children's participation in Head Start promotes parents’ educational advancement and employment. We use data from the Head Start Impact Study (HSIS), a randomized trial of over 4,000 newly entering three‐ and four‐year‐old children. We find that parents of children in the three‐year‐old cohort (but not the four‐year‐old cohort), who were randomly assigned to and participated in Head Start, had steeper increases in their own educational attainment by child age six years compared to parents of children in the control group. This pattern is especially strong for parents who had at least some college experience at baseline, as well as for African‐American parents. We do not find evidence that Head Start helped parents enter or return to the workforce over time. Results are discussed in the context of using high‐quality early childhood education as a platform for improving both child and parent outcomes.     

The nonprofit advantage: Producing quality in thick and thin child care markets

Nonprofit child care centers are frequently observed to produce child care which is, on average, of higher quality than care provided in commercial child care centers. In part, this nonprofit advantage is due to different input choices made by nonprofit centers—lower child‐staff ratios, better‐educated staff and directors, higher rates of professional development for staff. Nonprofit centers may have an additional productivity advantage, due to unmeasured staff motivation and abilities or to better management of the production of good‐quality child care. However, where nonprofit and for‐profit child care firms compete in the same local markets, we speculate that this extra advantage should only appear where demand is sufficiently “thick” to permit a quality differentiation strategy to be financially viable for nonprofits. We estimate the effect of nonprofit status on quality, controlling for differences in financial resources available to the center, differences in the clientele served, and differences in staff and center inputs. In this conventional examination, nonprofit status has a moderately positive impact on quality. However, when we account for the unobserved heterogeneity and separate markets into “thick” and “thin,” a particularly strong nonprofit advantage is found in thick markets, but no productivity advantage for nonprofits is found in thin markets. This finding suggests a clear role for nonprofit organizations in improving the cost‐quality trade‐off faced by parents, but also identifies the market conditions that affect the ability of nonprofit managers to employ this advantage. © 2009 by the Association for Public Policy Analysis and Management.     

Ranking state fiscal structures using theory and evidence

This paper offers unique rankings of the extent to which fiscal structures of U.S. states contribute to economic growth. The rankings are novel in two key respects: They are well grounded in established growth theory, in which the effect of taxes depends both on the level of taxes and on the composition of expenditures; and they are derived from actual estimates of the link between fiscal structures and economic growth. Estimates for the latter yield a growth hill, in which the incremental effect of taxes spent on productive services and infrastructure initially rises, reaches a peak, and then declines. Rankings derived from these estimates differ sharply from typical rankings based on levels of taxation alone. Two hypothetical policy experiments highlight both the growth‐hill effects of tax investments in productive services and infrastructure and the short‐ and long‐term tradeoffs in attempting to fund strong social services. © 2008 by the Association for Public Policy Analysis and Management.     

Autonomous Agencies,Happy Citizens? Challenging the Satisfaction Claim

Is the delegation of public services to semi‐autonomous agencies associated with increased citizen satisfaction? This article assesses three theoretical routes that might link the two: responsiveness, credible commitment, and blame deflection. The article draws on data from the European Social Survey and an expert survey about delegation of tax and police services to semi‐autonomous agencies in 15 countries. No supporting evidence was found for the responsiveness and credible commitment theories. Yet semi‐autonomous agencies sometimes can absorb or deflect blame for bad performance. In the tax case, dissatisfied service users blame the agency, rather than the government. The presence of an agency worked as a scapegoat for dissatisfied service users and resulted in less dissatisfaction with the government in countries where tax services were delegated.     

Easy Money: Tax Exporting and State Support for Higher Education

There is a substantial literature that assesses the effects of tax‐exporting capacities on the tax structures and aggregate spending levels that state governments choose to implement, but no work exists that isolates the effects of state tax exporting on higher education spending. Using state‐level data for 1989, 1995, 2002, and 2007, we estimate for the median voter in each state the change in the marginal cost of higher education subsidization generated by tax exportation, and calculate the increased higher education spending that results. We consider three types of spending: state appropriations to public universities as well as need‐ and non‐need‐based aid awarded to in‐state students. We find that neither type of aid is responsive to the marginal cost, or tax price, faced by the median voter. However, the median voter's price elasticity of demand for state appropriations is statistically significant and negative. We find that the median voter's tax price is substantially reduced by the presence of prominent mining and tourism industries and by the federal deductibility offset available to firms. Thus, these tax‐exporting capacities exert upward pressure on voter demand for state appropriations to public universities.     

Can child care assistance in welfare and employment programs support the employment of low‐income families?

Policymakers have long recognized child care as a key ingredient in low‐income parents' employability. We examine the effects of expansions in child care policies that were bundled with a mix of employment‐related policies and implemented as part of several random assignment studies on families' child care access and cost. Almost all of these welfare and employment programs increased employment and led to concomitant increases in the use of child care, especially paid child care. Only the programs that also expanded access or affordability of child care consistently increased the use of child care subsidies and reduced out‐of‐pocket costs to parents, allowing parents to purchase center‐based care. With one exception, such programs had small effects on employment‐related child care problems, suggesting that broader and more generous targeting of child care assistance may be important for achieving the goal of enhancing the stability of employment among low‐income families. © 2004 by the Association for Public Policy Analysis and Management.     

Tax Toleration and Tax Compliance: How Government Affects the Propensity of Firms to Enter the Unofficial Economy

How do government‐supplied institutional benefits and the taxation and regulation of producers affect the propensity of private firms to enter the unofficial economy and evade taxation? We propose a model in which the incentive of firms to operate underground depends on tax rates relative to firm‐specific thresholds of tax toleration that are decisively affected by quality of governance—in particular by the presence of high‐grade institutions delivering services enhancing official production that anchor profit‐maximizing firms to the official economy. Some key predictions of the model concerning the determinants of firms' tax toleration and tax compliance receive broad support from empirical analyses of enterprise‐level data from the World Bank's World Business Environment Surveys.     

Performance measures in tax administration: Chile as a case study

The article proposes a set of tax administration performance measures and contrasts them with measures actually used by the Chilean tax administration agency. The goals assumed for the tax administration agency (TA) are to maximize tax revenue collection and provide quality services to taxpayers. Ideal performance measures (PMs) would measure the deviation of actual outcome from a best‐practice standard, given the value of all variables affecting organisation performance that are outside management control. The key challenge is to build and calculate these best‐practice outcomes. In Chile the PM in use, for the first goal, is the ratio of actual to potential tax revenue collection. This PM does adjust revenue collection for variations in the tax structure and rate, but it fails to control other variables that affect performance such as the TA budget and per capita income. The PM in use, for the second goal, is taxpayer satisfaction measured through sample surveys. This seems the appropriate PM, as quality of taxpayer services depends directly on the TA efforts to improve them. Copyright © 2005 John Wiley & Sons, Ltd.     

Accountability via Performance Measurement: The Case of Child Protection Services

Since the 1980s child protection agencies have been subject to enormous scrutiny about perceived poor performance. Concerns are expressed about the capacity of services to cope with demand, the quality of practice, out‐of‐home care standards, and poor outcomes for children. Enter performance measurement. Using quantitative data to monitor effectiveness and efficiency, performance measurement promises improved resource management and accountability. This article discusses national, Victorian and Queensland child protection performance measurement regimes. It examines the extent to which performance measurement is used to promote accountability, as well as the indirect role of performance measurement in communicating policy intent. It suggests performance measurement is under‐utilised in child protection, but could be enhanced to contribute to better outcomes for children and families.     

The Internationalization of Early Childhood Education and Care Issues: Framing Gender Justice and Child Well‐Being

This article investigates the extent to which early childhood education and care (ECEC) issues have been internationalized to become the focus of attention of a number of international organizations (IOs). Through an examination of policy statements and other primary documents, the article explores how these IOs frame the ECEC policy debate. While a great deal of those IOs' recommendations are increasingly cast in human capital development terms, multiple and competing frames are in evidence: one that rests on more social pedagogic norms that promote a concern for the well‐being of the “whole child”; another that focuses on children's rights to services and countries' obligations to deliver services; and another that focuses on parental employment concerns and the connection between ECEC policies and programs and women's employment. The article examines each of the frames in evidence and evaluates their ability to address concerns of both gender justice and child well‐being.     

Policy attribute framing: A comparison between three policy instruments for personal emissions reduction

A comparative experiment in the UK examined people's willingness to change energy consumption behavior under three different policy framings: energy tax, carbon tax, and personal carbon allowances (PCA). PCA is a downstream cap‐and‐trade policy proposed in the UK, in which emission rights are allocated to individuals. We hypothesized that due to economic, pro‐environmental and mental accounting drivers PCA would have greater potential to deliver emissions reduction than taxation. Participants (n = 1,096) received one version of a survey with the same energy‐behavior–related questions and identical incurred costs under one of the following framings: energy tax (where carbon was not mentioned), carbon tax, and PCA. Results suggest that policies that draw people's attention to carbon (PCA and carbon taxation) could have greater impact on their stated willingness to reduce energy consumption, and on the reduction amounts prompted, than would a non‐overt price signal (energy tax). There is mixed evidence, however, as to whether PCA or carbon taxation would produce the largest energy demand reductions. Some indication was found for a spillover toward wider carbon conservation under the PCA framing. © 2011 by the Association for Public Policy Analysis and Management.     

THE IMPACTS OF DIFFERENT TYPES OF COLLEGE INSTRUCTORS ON STUDENTS’ ACADEMIC AND LABOR MARKET OUTCOMES

Based on a novel data set that links college administrative information with earnings records from a state college system for both public two‐year and four‐year colleges, this study quantifies the impacts of exposure to different types of instructors during students’ initial semester in college on their subsequent academic and labor market outcomes. To minimize bias from student sorting by type of instructor, we combine course‐set fixed effects with an instrumental variables approach that exploits term‐by‐term fluctuations in faculty composition in each department, therefore controlling for both between‐ and within‐course sorting. The findings suggest that two‐year students, particularly racial minority students, have substantially higher levels of exposure to adjuncts with temporary appointments than four‐year students. Two‐year students taking a heavy course schedule with temporary adjuncts are adversely affected in college persistence and subsequent credit accumulation, and the penalty is particularly pronounced among males and racial minority students with stronger academic potential. Such negative impacts on academic outcomes do not translate into poorer short‐ to medium‐term labor market performance. In the four‐year setting, no significant distinction is identified between different types of instructors on either student academic or labor market outcomes.     

The Impact of Home‐Based Child Care Provider Unionization on the Cost,Type, and Availability of Subsidized Child Care in Illinois

In February 2005, Illinois became the first U.S. state to grant home‐based child care providers (HBCPs) the right to form a labor union in order to bargain collectively with the state government. This policy inspired similar efforts across the country and represents a potentially important direction for child care policy. To date, the implications of labor unions for the cost, type, and availability of subsidized child care have not been evaluated empirically. In this study, we examine the impact of granting Illinois HBCPs the right to form a labor union on (a) the type of child care (licensed vs. license‐exempt/home‐based vs. center‐based) used by subsidy‐receiving Illinois infants and toddlers; (b) the per‐child cost of subsidized child care for infants and toddlers; and (c) the percentage of Illinois infants and toddlers who use child care subsidies. To conduct these analyses, we combine data from the Current Population Survey with Child Care and Development Fund administrative records on U.S. infants and toddlers whose families received child care subsidies during the period from 2002 to 2008. We use both a traditional difference‐in‐differences as well as a comparative case study with a “synthetic” control group approach. The synthetic control group approach improves on traditional comparative case studies by providing a transparent, empirical approach for constructing the counterfactual, documenting comparison units’ contribution to the synthetically created control group and detailing the degree to which the synthetic control group is, or is not, similar to the treated unit on preintervention measures of the outcome as well as on other selected characteristics. We find that subsidy‐receiving Illinois infants and toddlers spent an average of between 6.4 and 7 percentage points more hours in licensed care settings, as compared to license‐exempt settings, in the three years following child care unionization. We also find that between 0.7 and 1.1 percentage points fewer Illinois infants and toddlers used child care subsidies following unionization.     

Federalism and suitable housing for the frail elderly: A comparison of policies in Canada and the United States

Abstract

The frail elderly have special multidimensional housing needs beyond affordability, including shelter that is more adaptive to reduced function and offers supportive services. Suitable housing for this population comprises three policy areas—housing, health care, and social services. In a federal system, development and implementation of policies in these areas involves participation of several levels of government and the nongovernmental sector. This paper uses federalism as a conceptual framework to examine and compare these policy areas in Canada and the United States.

In both countries, general national housing policies—relying heavily on the nongovernmental sector and characterized by joint federal‐provincial programs in Canada and by important local government roles and age‐specific programs in the United States‐have benefited the elderly. The effects of such policies on the frail elderly, however, have been less positive because of the general lack of essential human services and, to a lesser degree, health care that enables them to live outside institutions. This is especially true in the United States, where health care policy is fragmented and is dominated by a private insurance system, partial federal financing of health insurance for the elderly, and tense federal‐state relations in financing health care for the poor. Although Canadian policies and programs operate autonomously and more uniformly within a national health plan, neither country has a universal, comprehensive long‐term care system. Geographically diverse patterns of social services, funded by grants to states and provinces and the nonprofit sector, are common to both countries. However, the United States has inadequately funded age‐specific programs and has relied on a growing commercial service provision. Housing outcomes for frail elders are moving in the right direction in both countries; however, Canada seems to be better positioned, largely because of its health care system. As increased decentralization continues to characterize the three policy areas that affect suitable housing for frail elders, the United States can learn from Canada's negotiated federalism approach to more uniform solutions to merging housing and long‐term care.     

Communicating the Vision: How Face‐to‐Face Dialogue Facilitates Transformational Leadership

For public managers facing political and structural constraints, transformational leadership promises to meaningfully improve outcomes by communicating an inspiring vision of the organization. But this promise rests to a great degree on the communication skills and behaviors of the leader. A better understanding of how transformational leadership functions in organizations therefore requires a deeper application of theory from the field of communications. This article explores the question of what communication behaviors facilitate transformational leadership. A media richness framework is applied to propose that transformational leaders will be most effective when employing a face‐to‐face dialogue approach to communication. Using a multisource longitudinal research design, the authors find support for this proposition in an empirical test of 256 Danish tax units, lower and upper secondary schools, child care centers, and bank branches. The findings also show that size matters, with diminishing effectiveness of face‐to‐face dialogue in larger organizations.     

The excessive costs of creative finance: Growing inefficiencies in the production of low‐income housing

Abstract

The paper examines creative finance as a means of low‐income housing production and preservation. The low‐income tax credit has evolved as the main federal housing production program in recent years. But this evolution can only be understood as a last resort. The inefficiencies of this approach outweigh any advantages. High transaction costs, inappropriate targeting of benefits, and insufficient monitoring are among the problems. Recent changes in the tax credit may actually cost the government more. Furthermore, current policy in fact creates the same time bombs now exploding in the prepayment projects. Current proposals for housing reform and revitalization have positive features, but are either underfunded or still rely on creative finance. What is needed is a direct one‐ or two‐step low‐income production program.     

Differential effects of high‐quality child care

In policy research a frequent aim is to estimate treatment effects separately by subgroups. This endeavor becomes a methodological challenge when the subgroups are defined by post‐treatment, rather than pre‐treatment, variables because if analyses are performed in the same way as with pre‐treatment variables, causal interpretations are no longer valid. The authors illustrate a new approach to this challenge within the context of the Infant Health and Development Program, a multisite randomized study that provided at‐risk children with intensive, center‐based child care. This strategy is used to examine the differential causal effects of access to high‐quality child care for children who would otherwise have participated in one of three child care options: no non‐maternal care, home‐based non‐maternal care, and center‐based care. Results of this study indicate that children participating in the first two types of care would have gained the most from high‐quality center‐based care and, moreover, would have more consistently retained the bulk of these positive benefits over time. These results may have implications for policy, particularly with regard to the debate about the potential implications of providing universal child care. © 2002 by the Association for Public Policy Analysis and Management.     

DYNAMIC SCORING OF TAX REFORMS IN THE EUROPEAN UNION

In this paper, we present the first dynamic scoring exercise linking a microsimulation and a dynamic general equilibrium model for Europe. We illustrate our novel methodology analyzing hypothetical reforms of the social insurance contributions system in Belgium. Our approach takes into account the feedback effects resulting from adjustments and behavioral responses in the labor market and the economy‐wide reaction to the tax policy changes essential for a comprehensive evaluation of the reforms. We find that the self‐financing effect of a reduction in employers’ social insurance contribution is substantially larger than that of a comparable reduction in employees’ social insurance contributions.