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Micro: Chapter 18
Midterm 3
| Term | Definition |
|---|---|
| welfare | government programs designed to alleviate economic hardship; |
| welfare state | helps with income inequality (what's the marginal dollar worth to the wealthy vs those in poverty?), economic insecurity (people feel safer when they know they have a safety net); benefits of reduced poverty and access to health care; but at what cost?? |
| poverty | assign a household income value based on number of members and if they're below that, they're in poverty; big fluctuations; hasn't been adjusted upward to relflect standard of living |
| what drives poverty? | education matters (although growing difference in highly educated workers themselves); racial and gender bias; poor English skills; health care costs now play a major role (62% bankruptcies = medical expenses) |
| consequences of poverty | tends to be self perpetuating; very hard to get out of poverty; one of highest preditors of education and salary is education and salary of the parent |
| mean household income vs median household income | mean > median because distribution is skewed right; although US has a very high mean income, it still has a high poverty rate due to skewed income distribution |
| GINI coefficient | .4-.49 in US; 0= perfect distribution; 1= only 1 person has $ |
| inequality over time | pre 1980: growth was pretty consistent across quartiles; since 1980s growth has been unequally distributed; |
| what explains growth in inequality? | changes in the returns to education and technology (tech makes some workers more efficient but replaces others); immigration impacts different skill groups differently; outsourcing (manufacturing is well paying for average education level) |
| means-tested | poverty programs that are available only to those whose income falls below a certain level; designed only for those with a low income; ex: TANF, SSI, EITC, food stamps, medicaid |
| monetary transfers | programs that provide monetary transfers that individuals can spend as they choose |
| in-kind benefits | a benefit given in the form of goods or services; ex: food stamps, medicaid, medicare |
| social security | monetary, not means-tested; huge transfer of wealth between working and non working population; anti-poverty measure, 60% of elderly rely on it for at least half; current workers fund retired workers |
| unemployment insurance | monetary, non means-tested; provides support structure for workers that lose their job; funded by tax on employers; 35% of salary for 26 weeks |
| Supplemental Security Income (SSI) | monetary, means-tested; designed to help disabled children and adults with limited resources |
| Temporary Aid to Needy Families (TANF) | monetary, means tested; additional income for poor families, but requires individuals to be working or looking for work (with time limits) |
| EITC (Earned Income Tax Credit) | means tested, monetary; supplements working income by providing tax returns; phased out over income rates; negative income tax |
| food stamps | means tested, in-kind transfer; |
| health care in the us | gov plays a role, but less so than other countries; much of medical coverage is private (risk pooling is good, but can cause adverse selection and death spiral); so employer based insurance good bc spreads risk across all employees in a firm |
| medicare | over 65, not means tested, funded by taxes |
| medicaid | means tested, covers many poor children; funded by taxes |
| uninsured | low-income, part-time workers that don't get insurance through work; many children covered by SCHIP; problems: if they need medical care it can be extremely expensive, many without it use emergency room which is inefficient and costly |
| health care reform | costs have been increasing, both private and gov bc inefficiencies in the system; modifying the health care system= Obamacare (PPACA); designed to increase insurance coverage and control cost expansion |
| increasing coverage | one of major problems was ability to deny coverage bc pre-existing conditions; solution is to (1) require firms to sell to everyone and (2) it is illegal not to have insurance (adverse selection); if they can't afford it we (3) subsidize for low-income |
| cutting costs | actually expands costs- subsidizing health care, requiring more people to get insurance; but people added largely the cheapest to cover; goal is for no increase in growth of cost; shifting from a pay for service alleviates incentive for unneeded services |
| How much welfare to provide? | we pay with taxes; taxes cause DWl; higher progressive tax rates= negative incentives for work (less likely to work if giving up marginal dollars); means-tested programs= incentive issues (notch- small changes in income= large change in welfare benefits |
Created by:
nicook
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