L10 Oct 4 - Government Assistance Part 2 1 Equity...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Government Assistance Part 2 1 Equity Efficiency Tradeoff Assistance serves as an increase in nonlabor income which, all else equal, should reduce labor supply Burtless (1986) reviewed evidence of effects of G Needed $2 transfer to increase income by $1 Higher transfers reduced labor supply more Unemployment insurance (Katz and Meyer 1990) Increase in duration of benefits by one week Increased unemployment spell by 1/5 of a week 2 What are we ignoring? Transfer programs may offer benefits to those that pay for them, not just those that receive the transfers Looking at the long-run Loss of efficiency now in exchange for greater productivity later investing in the poor 3 Blanks argument Cases when no equity-efficiency tradeoff exists (or is minimal) When individuals cannot change their behavior (Lack of agency) When the program requires certain behavior (conditions) When transfers act as investments in the future 4 Review Costs and Benefits Costs Administration Reduced labor supply by recipients Reduced labor supply by tax payers Benefits Reduced poverty and deprivation (enters utility function of tax payers) Increased health and education Higher productivity/labor supply in the future 5 Lack of Agency Disabled / handicapped Elderly Explains popularity and acceptability of some programs Social security for elderly and handicapped May still be behavioral changes Unless individuals have no family or are isolated 6 Conditional Transfers Welfare-to-work Stay in school for teen moms Job search requirements for unemployment insurance recipients 7 Problems with conditions Government (social workers) might not be very good at distinguishing between those who can meet conditions and those who cannot Introduces unwarranted and potentially abused discretion into the system Difference in how people are treated in the system could cause individuals to attempt to change their characteristics 8 Transfer programs act as investments College grants to low-income students Food assistance WIC School meals head start Etc 9 Allocation of social assistance? 2006 Number of recipients (millions) Total Annual Cost (billions) Medicaid 55 319.5 SSI 7.1 40 EITC 22.8 45 TANF 4.5 22 Food stamps 25.7 30.3 housing 5.1 40 School lunch 29.6 10.5* WIC 8 5.2 head start 0.9 7.0 10 Allocation of social assistance?...
View Full Document

This note was uploaded on 09/07/2011 for the course ECON 375 taught by Professor Staff during the Fall '10 term at Maryland.

Page1 / 51

L10 Oct 4 - Government Assistance Part 2 1 Equity...

This preview shows document pages 1 - 12. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online