MIP network member Robert Moffitt is the Krieger-Eisenhower Professor of Economics at Johns Hopkins University, where he also holds a joint appointment in the School of Public Health. His research interests are in the areas of labor economics and applied microeconometrics, with a focus on the family and welfare systems for the poor. He is a Fellow of the Econometric Society, a Fellow of the Society of Labor Economists, a National Associate of the National Academy of Sciences, a recipient of a MERIT Award from the National Institutes of Health, a recipient of a Guggenheim Fellowship, and a Fellow of the American Academy of Arts and Sciences. Moffitt received his Ph.D. in Economics from Brown University.
Describe your area of study and how it relates to current policy discussions surrounding inequality.
My main area of research related to inequality is the economics of means-tested transfer programs. All developed countries and many less developed adopt social policies to ameliorate inequality by raising the incomes of those at the bottom of the distribution. Some of those policies are intended to raise the human capital of disadvantaged individuals while others are intended to provide direct support in the form of resource transfers. Ideally, human capital policies should be found to raise earnings of those at the bottom and hence eliminate the need for transfer programs, but they are slow-moving and contribute only in the long run. In the short run, direct transfers are needed.
My research has concerned the effects of various transfer programs, primarily those in the U.S., on employment, wages, and family structure. I have conducted research both on cash transfer programs like AFDC-TANF and the EITC as well as on in-kind transfer programs like Food Stamps, Medicaid, and subsidized housing programs, which can have different effects on behavior than cash programs. I have also conducted research to advance our understanding of the level of marginal tax rates (MTRs) facing families at the bottom of the distribution, taking into account tax systems as well as transfers.
The U.S. has undergone a number of major reforms of its transfer system over the last 50 years, including reductions in MTRs in the 1960s, increases in MTRs in the 1980s, then a return to reductions in the late 1990s. Work requirements have been imposed in some programs and income eligibility levels have been changed in others. The types of demographic groups covered by many transfer programs have also changed over time. I conduct research on welfare reforms of all types and their effects on behavior and on inequality.
Like all applied micro researchers, I have been concerned with methods of estimating causal effects in my work. I have been a proponent of the estimation of marginal treatment effects, beginning with my paper with Bjorklund in 1987. Marginal treatment effects are useful because the response to almost all transfer programs is heterogeneous in the population, and policy makers need to take that heterogeneity into account when considering alternative reforms.
Other areas of my research related to inequality include work on trends in earnings and income instability in the U.S., which is heavily concentrated in the disadvantaged population. Economic instability can have deleterious effects on the ability of lower income families to save, to invest in human capital, and to make productive economic decisions. I have also studied the decline in the employment-population ratio in the US, which is concentrated in the less educated population, and am currently working on further investigations of that decline, especially among women. I have also studied the effects of transfer programs on family structure, including a forthcoming paper on the effect of 1996 welfare reform on marriage and cohabitation.
I have also conducted descriptive research on trends in the distribution of transfers in the U.S. over the last 30 years. My best-known paper in this area was published as a Presidential Address in Demography in 2015, showing that transfers in the U.S. are increasingly going to those with private incomes between $15,000 and $30,000 and that transfers going to those with private incomes below $15,000 have fallen over time. This reflects a decline in the willingness of policy makers to provide support to nonworkers.
While much research on inequality concerns trends in the underlying level of wages in the disadvantaged population, research on transfer programs, their effects, and their optimal design must be a central part of any agenda on the study of economic inequality and its trends.
What areas in the study of inequality are most in need of new research?
Welfare reform never disappears from the agenda and new issues keep arising. New proposals for work requirements in the U.S. have demonstrated the major lack of research evidence we have on their effects. The last RCTs we did were in the 1990s and research on 1996 welfare reform has not been successful in isolating the effects of its work requirements per se, which were bundled with many other components in that reform.
Although the issue is very old, the problem of MTRs never goes away. MTRs facing the poorest families have fallen over time because of the EITC and the Child Tax Credit. But, as a matter of algebra, this has resulted in an increase in MTRs for those with low incomes but with income somewhat above the poorest. How to manage this conflict is an old problem in optimal redistribution but is still not understood by policy makers or by many public policy commentators.
On specific welfare programs, the SSI program is often noted as the largest program with the least amount of work conducted on it. This was pointed out in the Duggan-Kearney-Rennane review paper in my 2016 compendium of research on major transfer programs. Some good work has been done recently but more work is desperately needed on SSI.
Another old literature is that on manpower training programs for adults after schooling has ended. As demonstrated in the Barnow-Smith review paper in my 2016 compendium, we still have not found programs that improve their earnings non-marginally. We cannot give up on disadvantaged individuals after they have left school, but we are pretty much in the dark right now as to how to help them.
One thing I think we don’t need more of are studies of 1996 welfare reform (having said that, I have recently completed one study, which I hope will be my last).
What advice do you have for emerging scholars in your field?
Working on interesting problems is the most important advice, obviously, and the above list provides a list of suggestions in the area of welfare reform, but only a partial one—there are many more. But a few pieces of career advice may also be helpful. One is to try to have a combination of papers that work on conventional topics and on well-established topics where a lot of work has been done already, together with a few papers that are more daring and unconventional but which demonstrate creativity and the ability to think outside the box. A second is to continue to invest in your human capital by learning more econometric techniques and by developing technical skills in general. A third is to learn how to program so that you are not limited by Stata. A fourth is to have at least a few papers where you are effectively the lead coauthor; everyone coauthors nowadays, but you need to establish yourself as a leader in a particular topic or two. Finally, for those who study the low income population, I recommend reading every ethnographic study you can get your hands on; such studies are invaluable in getting a sense of how the lives of the disadvantaged are actually lived, and can generate interesting hypotheses to model and test.