Can Welfare Reform Eliminate Poverty

摘要

This paper describes the existing welfare system, outlines the problems within the system, and presents the principles on which President Carter's reform proposals are based. It then analyzes the level and trend in poverty since 1965 and the antipoverty effect of income maintenance programs in general and welfare programs in particular. It is concluded that the existing welfare system covers only a segment of the poor, pays varying amounts of benefits to persons with similar needs, and is costly to administer. In addition, it contains adverse work and migration incentives and encourages family breakup. Because the system is too complex for many of the poor to understand, they may not receive benefits which they need and to which they are entitled. President Carter's Program for Better Jobs and Income has four major components -- job opportunities for the poor, work benefit and income support provisions for those expected to work, income support payments for those not expected to work, and tax reductions through the earned income tax credit. Each of these components is explained and criticized. The proposed welfare reform raises income but does not eliminate poverty for those who do not work (due to budget constraints), significantly reduces poverty for those who work a substantial part of the year, and provides a work opportunity yielding an income above poverty level to family heads who cannot find a regular job. A successful welfare reform could mitigate many of the defects of the current economic system, but would not end economic dependence on welfare. This suggests that it is time to focus on two other means to reduce poverty -- changes in the labor market that currently generates an unacceptably high level of pretransfer poverty, and an expansion of the social insurance system to cushion a greater variety of income losses. References are provided.