A renewed interest in federal spending and deficits following the enactment of large tax cuts is focusing debate on spending on anti-poverty programs — currently over $100 billion per year. How we spend the money may be more important than how much we spend. New research is building a case for anti-poverty policies that invest in the people we are trying to help — investing in children, but also encouraging adults to work to enhance their ability to become economically self-sufficient in the long term.

Most research and debate focuses on the short-term effects of anti-poverty policies. For example, if we impose work requirements for Medicaid, how many poor adults will lose health insurance? Or if we raise the minimum wage, what share of the higher wages will go to poor families?

But can we do more to combat poverty than simply engaging in the same redistribution year after year?

A growing body of research shows that some policies targeting poor children lead to improved outcomes that can reduce government spending and other costs in the longer run. For example, childhood eligibility for Medicaid reduces hospitalizations among black adults. Access to Food Stamps in childhood improves adult health. And Nobel Laureate James Heckman argues that intensive investment in early childhood development of disadvantaged children improves health and education and reduces crime in the longer run.

Investing in children is good, but we need different policies to address low income and poverty among adults. The minimum wage and the EITC have the potential to increase the income adults earn from work. However, my recent research shows that these two policies can have quite different longer-run effects on earnings and hence on economic self-sufficiency.

The minimum wage does, of course, provide an immediate boost to earnings of employed workers. But much evidence indicates that minimum wages reduce employment among young workers, costing them the work experience that generates earnings growth in the longer run. Employer cutbacks in training in response to higher minimum wages can also reduce long-term earnings growth.

One of my recent studies shows that higher minimum wages since 2000 have contributed significantly to declines in employment among teens in school. Perhaps teens, facing fewer job opportunities, invested more in schooling to increase their skills. By studying outcomes of adults who faced different minimum wages as teenagers, I can assess the longer-run effects of minimum wages. As it turns out, there is no evidence that exposure to a higher minimum wage as a teen led to increased investment in schooling, and correspondingly, if anything, there is evidence that exposure to a higher minimum wage when young may have reduced adult earnings.

In contrast, the EITC promotes work among those eligible for its most generous benefits — low-skilled single mothers — which can increase earnings in the longer run.

To test whether the EITC increases earnings in the longer run, I follow women in their 20’s and 30’s, across many decades, tracking their childbearing and marriage, as well as the generosity of the federal and state EITC they faced in each year. The evidence shows that exposure to a more generous EITC leads to markedly higher earnings in the longer run among the less-educated, single mothers for whom the EITC creates strong positive work incentives — a critical population for reducing poverty.

Finally, in newly published research, in data covering many decades, my colleagues and I look at the longer-run effects of the minimum wage and the EITC on poverty and reliance on public assistance in disadvantaged Census tracts (small neighborhoods of around 4,500 people). We find that minimum wages perform abysmally, leading to higher poverty and a greater share on public assistance. In contrast, there is some evidence that the EITC had the opposite effects — reducing poverty and public assistance in the longer run — although the EITC may be less effective in severely disadvantaged neighborhoods where there is insufficient labor demand to absorb more people looking for work.

This growing body of evidence indicates that policies that invest in children, and policies that incentivize adults to work, can increase economic self-sufficiency and reduce poverty in the longer-run. In contrast, policies that focus on short-run redistribution have some potential pitfalls — sometimes helping children, but also reducing opportunities for adults to build human capital through work.

A stronger emphasis on policies that increase economic self-sufficiency in the longer-run can, in our polarized political environment, offer common ground for fighting poverty. Reducing poverty through long-term effects of pro-work incentives can appeal to Democrats focused on redistribution and to Republicans who emphasize work as the solution to poverty. And policies that invest in children to build even longer-run economic success can sidestep the philosophical divide about whether adult poverty is a choice we need to disincentivize or bad luck we need to insure against, because no one views children as responsible for the choices that make them poor.

-David Neumark is an economist and director of the Economic Self-Sufficiency Policy Research Institute at UC Irvine. Photo by Joshua Sorenson.