Last week, the National Academies of Sciences, Engineering, and Medicine released a groundbreaking report on reducing intergenerational poverty.
This study looked at the subject areas of health, education, safety, income, and housing as determinants of intergenerational poverty. Crucially, the study offers policy interventions that can be used to break the cycle of intergenerational poverty. Here we highlight some of the most promising policies in the study.
Expanding access to Medicaid
Children in poverty start with worse health outcomes than those not in poverty before birth and those disparities only grow as they age. Access to health care is a key strategy to close that gap. Medicaid is the most common form of health insurance among Americans experiencing poverty.
The report says that Medicaid expansions in pregnancy and childhood leads to not only better health at birth and throughout childhood but even improved labor market outcomes. This means investment in health insurance coverage now can reduce risk of poverty decades into the future.
Increasing K-12 spending in low-income districts
Currently, Scioto Analysis is conducting a cost-benefit analysis of increases in school spending. While our final results are still pending, we are currently certain of one thing: investments in low-income districts will have more benefits than investment in upper-income districts.
Children from low-income households tend to start school behind their peers in achievement and these gaps do not tend to close over time. Investment in low-income districts can help provide resources which could help reduce those gaps and break the cycle of intergenerational poverty.
Increasing mortgage lending
Crime disproportionately affects people with low-incomes. One result I was surprised to find in this study was that communities with more mortgage lending tend to have lower crime rates. This was found in a study of Seattle lending patterns which found that lending impacted violent crime but not vice versa. More investment in a community can lead to reductions in crime prevalence.
This could have long-term impact on poverty as well. Cleveland Fed Economist Dionissi Aliprantis finds black men who witnessed a shooting as a child have 31% lower earnings than those who did not and that it can be attributable to toxic stress. Reducing gun violence can be a tool for reducing intergenerational poverty.
Expanding housing vouchers
High lead levels, homelessness, overcrowding, frequent moves, and high housing costs are all both symptoms of and causes of future poverty. Increasing access to housing through programs like housing vouchers and coupling those resources with counseling and case management can reduce future incidence of housing insecurity and intergenerational poverty.
Expanding the earned income tax credit
Scioto Analysis has done a cost-benefit analysis of the earned income tax credit and recently conducted a cost-benefit analysis of a statewide child tax credit. These credits, targeted toward low-income households, put cash in the pockets of households with children. This leads to better educational and labor market attainment and health for children down the road.
All of these interventions can be conducted at the state level. States have a wide berth on how they can expand or contract access to Medicaid. States control how much funding goes to school districts. States can encourage lending in communities bereft of investment. States can create voucher programs. And states can create their own earned income and child tax credit programs. Now the only question is whether they are willing to make the investments to make intergenerational poverty a thing of the past.