lecture2_Sept7_slides (1)

lecture2_Sept7_slides (1) - September 7 2011 1 Poverty...

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Unformatted text preview: September 7, 2011 1 Poverty Measurement Poverty Measurement in the U.S. n Key characteristics of U.S. poverty measure – 1. YES/NO indicator – 2. Family-based measure (related by blood or marriage) – 3. Single national threshold – 4. Does not account for social participation – 5. Based on Pre-tax cash income – 6. Current annual income – 7. Absolute measure (rather than a relative measure) Impact of using pre-tax cash income for calculating poverty 1979 2006 Poverty rate (in percent): Cash income before transfers 20.1 19.9 Plus social insurance 17.9 18.1 Plus means-tested cash transfers 16.4 17.4 Plus means-tested non-cash benefits 13.3 15.2 Plus EITC and CTC, less Federal taxes 13.6 12.8 Source: US House Ways and Means Committee, The Green Book (2008) Child poverty rate using alternate income definitions: Using Current Annual Income to Measure Poverty n Permanent income hypothesis – What matters for whether somebody is in poverty – their income now, or their long-term income? n Why not measure consumption instead? – Benefit: Account for individuals who are not poor but have substantial assets to finance consumption – Drawback: Doesn’t account for long-term poor who deficit finance consumption – Additional drawback: Consumption data is often unreliable Using Current Annual Income to Measure Poverty (example) Average Income Current Income Absolute vs. Relative Poverty MeasurementsAbsolute vs....
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This note was uploaded on 02/03/2012 for the course ECON 375 taught by Professor Staff during the Fall '10 term at Maryland.

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lecture2_Sept7_slides (1) - September 7 2011 1 Poverty...

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