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Poverty in America: Is Welfare the Answer or the Problem?

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  • David T. Ellwood
  • Lawrence H. Summers

Abstract

This paper reviews the current policies for fighting poverty and explores the impact they have had. We begin by reviewing trends in poverty, poverty spending and economic performance. It is immediately apparent that economic performance is the dominant determinant of the measured poverty rate over the past two decades. Government assistance programs expanded greatly over this period, but the growth in cash assistance was too modest to have major effects, and the large growth in in-kind benefits could not reduce measured poverty since such benefits are not counted as income. Next we focus on three groups: the disabled, female family heads, and unemployed black youth. We find little evidence that government deserves the blame for the problems of each group, and suggest that the broad outlines of current policies are defensible on economic grounds.

Suggested Citation

  • David T. Ellwood & Lawrence H. Summers, 1985. "Poverty in America: Is Welfare the Answer or the Problem?," NBER Working Papers 1711, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1711
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    1. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
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    Cited by:

    1. Stephan Klasen & Ingrid Woolard, 2009. "Surviving Unemployment Without State Support: Unemployment and Household Formation in South Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 18(1), pages 1-51, January.
    2. J. R. Walker, "undated". "Migration amoung low-income households: Helping the witch doctors reach consensus," Institute for Research on Poverty Discussion Papers 1031-94, University of Wisconsin Institute for Research on Poverty.
    3. Timothy Waidman & John Bound & Austin Nichols, 2003. "Disability Benefits as Social Insurance: Tradeoffs Between Screening Stringency and Benefit Generosity in Optimal Program Design," Working Papers wp042, University of Michigan, Michigan Retirement Research Center.

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