The Relationship Between Government Income Assistance and Child Poverty Rates

Abstract

Supplemental income assistance programs are designed to alleviate poverty and often are targeted on families with impoverished children. The effectiveness of these programs is highly contested. While many consider government income support programs vital for reducing poverty, others question their ability to accomplish this goal. Using state-level panel data, this study attempts to measure a relationship between aggregated government income transfers and the child poverty rate. I find that aggregated state and federal income transfers are not associated with the child poverty rate. When the aggregated measure is broken down into individual programs, only Unemployment Insurance (UI) expenditures are negatively correlated with the child poverty rate. My findings also confirm the well-established correlation between the macro-economy and poverty rates. The results of this examination suggest that policymakers should consider expanding dynamic income assistance programs such as UI, which can either increase or decrease total expenditures, depending on macroeconomic circumstances.