1 / 36

Chapter 12 Poverty, Welfare, and Women

Chapter 12 Poverty, Welfare, and Women. Poverty in the U.S. Welfare programs incentives reform EITC. Measuring poverty. Bureau of the Census 12.1% population is “poor” 2003 official poverty rate where does that come from?. Calculating the poverty rate.

marnina
Télécharger la présentation

Chapter 12 Poverty, Welfare, and Women

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 12 Poverty, Welfare, and Women • Poverty in the U.S. • Welfare • programs • incentives • reform • EITC

  2. Measuring poverty • Bureau of the Census • 12.1% population is “poor” 2003 • official poverty rate • where does that come from?

  3. Calculating the poverty rate • compare HH money income to poverty threshold • poverty threshold • cost nutritionally adequate diet for HH x 3 • $14,824 for adult w/ 2 children (2003)

  4. money income • earned income, interest income • + cash benefits • before taxes • does not include noncash benefits • food, housing, medical care • poverty rate is sensitive to the income measure

  5. criticisms • poverty measure overstates problem • money income does not include non-cash benefits • poverty measure understates problem • HH should only spend 20-25% of budget on food

  6. poverty varies • household type • education • race • sex • age • state

  7. by state, 2002 • New Hampshire 5.8% • New York 14% • New Jersey 7.9% • Pennsylvania 9.5% • Mississippi 18.4%

  8. feminization of poverty • high poverty rate among female-headed HH (28%) • rising number of female-headed HH over past 30 years • over 50% of poor families are female-headed HH

  9. child poverty, 2004 • % of people < 18 living in poverty • 17.2% (all) • 29.4% (Hispanic) • 33.2% (Black)

  10. Why are women more likely to be poor? • more single women have custody of children • women, on average, earn less • mothers, on average, earn less • alimony, child support is spotty • women live longer

  11. Why are people poor? • lack of education, skills • spotty work history • low wages • adverse events—divorce, job loss, disability • bad attitudes? • small % of those in poverty are their for a long time

  12. Do programs to help the poor actually encourage poverty?

  13. What is welfare? • “means-tested” assistance • several different programs • federally and state funded • administered by states • states get wide latitude

  14. housing assistance (HUD) • rent vouchers • subsidized housing • housing renovation • home heating • food assistance • food stamps (dept. of Agriculture) • WIC • school lunch program

  15. medical care • Medicaid • state subsidized health insurance • childcare subsidies • cash assistance • AFDC/TANF • SSI

  16. unemployment compensation • is NOT welfare • have to qualify --work history • funded through payroll taxes

  17. Cost of welfare • 2001 $82 billion • total federal budget = $1.85 trillion • 4.5% of the federal budget

  18. Welfare and work • prior to 1996, • no time limit on benefits • benefits cut (earnings penalty) when recipients work

  19. Welfare and work incentives • welfare is nonearned income • income effect • earnings penalty • makes working costly • substitution effect

  20. recall our time allocation model • decision to work depends on MVT from working • welfare lowers MVT of work • earnings penalty lowers effective wage • welfare acts as nonearned income

  21. with a lower MVT for work, • cut back on work to boost overall utility • allocate more time to leisure, housework

  22. evidence • studies show that AFDC reduces labor supply of its recipients

  23. Welfare Reform • many states experimented with reforms in late 1980s – early 1990s • Federal reform 1996

  24. 1996 Welfare Reform • AFDC replaced by TANF • block grants to states to use as they see fit • not a legal entitlement • time limits • 5 years total • after 2 years, work requirements

  25. limits on benefits for noncitizens • focus on family formation • discourage unwed/teenage motherhood • family caps • child support enforcement • programs that encourage marriage

  26. Evidence • huge TANF caseload decline 1996-1999 • 4.4 million to 2.1 million • success of reforms? and/or • rapid economic growth

  27. studies • 1/3 of decline due to reforms • 1/5 of decline due to economy

  28. impact on marriage • state evidence suggests that work requirements reduce marriage • women more self-sufficient, • women have less time for relationships

  29. EITC • Earned Income Tax Credit • started 1975 • expanded 1990s • EITC is like a negative tax • refundable tax credit to low-income families • up to about $4000/yr.

  30. EITC vs. welfare • family must have earnings • married & single parents eligible • structure rewards works • greater political support • alternative to minimum wage

  31. Impact of EITC • increased LFP among single mothers • but decreases LFP among married mothers in families close to cut-off point • loss of EITC makes work too costly

More Related