ECON375 FINAL STUDY GUIDE

ECON375 FINAL STUDY GUIDE - ECON375 FINAL STUDY GUIDE...

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ECON375 FINAL STUDY GUIDE Prepared by Jorge H Perez Key Terms 1. TANF (temporary assistance for needy families)-block grant(not entitlement) that developed program authority to the states. Restrictions include work requirements (AFDC did not) and a 5 year federal maximum time limit to receive benefits. 2. Food Stamp Program (FSP) permanent as of 1964-Entitlement, target is most individuals and households regardless of family structure, delivered via EBT card (2010), with the benefit being food for at-home preparation. Eligibility includes countable resources < $2000, gross monthly income <130% federal poverty line, net monthly income <100% fpl. The American Recovery and Reinvestment Act of 2009 raised the maximum benefit level by 13.6%. Value of food stamps reduced poverty depth by 14-23%. Value of food stamps reduced poverty severity by 28%. Additionally, quality control by double checking a sample of participants’ records for errors. Models in-kind assistance (food stamps) on budget line x-axis=food y-axis=all other goods budget line shifts from
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1 to 2 after implementation 3. WIC-NOT an entitlement, target is pregnant and post-partum women, infants and children, delivered via VOUCHERS. In 2008 $6.2 billion was allocated for the program to include 8.7 million participants, thus an average monthly benefit of $43. Additional benefits include health education and health care referrals. Some effects of WIC show a significant reduction in birth complications (women & children) and saved MEDICAID expenses. 4. School Lunch and School Breakfast Programs-Entitlement(given the school offers meals) target is school age children, delivered through meals at school. Congress created NSLP after investigation into health of young men rejected in the WWII draft showed a connection between physical deficiencies and childhood malnutrition. Eligibility includes family income <130% fpl (free) and reduced is between 130% and 185%. 5. Medicaid- Entitlement program, federally mandated, all or nothing coverage, Eligibility and services covered vary greatly across states. Note: Moral hazard of insurance could lead to overconsumption of medical care. Also fee-for- service versus pay for performance poses a dilemma in the U.S. 6. Medicare- Entitlement for the elderly upon retirement age. 7. EITC(Earned income tax credit)- Refundable income tax credit for low-wage workers and families-- Refundable means families that do not owe tax still receive the full benefit as a tax refund. Eligibility requirements include an earned income during the year, a valid SSN, investment income <$2950, filing status everything but “married, filing separate return.” Neumarkand Wascher demonstrated that state level variation in EITC combined with increased labor market activity reduced poverty. Grogger found that increases in EITC during the 90s reduced welfare usage. EITC expansion accounts for about 60% of the increase in the employment of single mothers between 1984-1996 and about 31% of the increase between 1992-1996. EITC filers increase spending on durable goods in the months refunds are given.
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