Poverty Trap 7. The American Poverty Trap is a phrase used to describe the tendency for individuals below the poverty line to remain there due to the structure of America's safety-net income stabilization programs. 8. The issue is that federal and state benefits decline as a worker goes from being unemployed to becoming fully employed. As earned income increases, the amount of benefits fall. 9. Thus, the marginal benefit of working is increased income, but the marginal cost includes declining benefits, and a loss of leisure time. 10. Federal and state programs are designed so that as the worker nears the poverty line, the increase in income is matched by a decline in benefits. 11. Thus, the worker gains very little by working more! This structure is actually a disincentive to work. 12. What would be a better solution? End all poverty programs? Provide all citizens a poverty level income stipend? What do you think? What have you been told is the way to avoid being trapped in poverty? 5:05 / 5:58 YouTube Q E3 CC The economic theory that explains why citizens become caught in the American poverty trap? Select one: a. diminishing returns to production b. rational self-interest c. labor theory of work versus leisure tradeoff d. labor specialization
Poverty Trap 7. The American Poverty Trap is a phrase used to describe the tendency for individuals below the poverty line to remain there due to the structure of America's safety-net income stabilization programs. 8. The issue is that federal and state benefits decline as a worker goes from being unemployed to becoming fully employed. As earned income increases, the amount of benefits fall. 9. Thus, the marginal benefit of working is increased income, but the marginal cost includes declining benefits, and a loss of leisure time. 10. Federal and state programs are designed so that as the worker nears the poverty line, the increase in income is matched by a decline in benefits. 11. Thus, the worker gains very little by working more! This structure is actually a disincentive to work. 12. What would be a better solution? End all poverty programs? Provide all citizens a poverty level income stipend? What do you think? What have you been told is the way to avoid being trapped in poverty? 5:05 / 5:58 YouTube Q E3 CC The economic theory that explains why citizens become caught in the American poverty trap? Select one: a. diminishing returns to production b. rational self-interest c. labor theory of work versus leisure tradeoff d. labor specialization
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter15: Poverty And Economic Inequality
Section: Chapter Questions
Problem 32CTQ: Exercise 15.2 and Exercise 15.3 asked you to describe the labor-leisure tradeoff for Jonathon....
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Transcribed Image Text:Poverty Trap
7. The American Poverty Trap is a phrase used to describe the tendency for
individuals below the poverty line to remain there due to the structure of
America's safety-net income stabilization programs.
8. The issue is that federal and state benefits decline as a worker goes from
being unemployed to becoming fully employed. As earned income
increases, the amount of benefits fall.
9. Thus, the marginal benefit of working is increased income, but the
marginal cost includes declining benefits, and a loss of leisure time.
10. Federal and state programs are designed so that as the worker nears the
poverty line, the increase in income is matched by a decline in benefits.
11. Thus, the worker gains very little by working more! This structure is
actually a disincentive to work.
12. What would be a better solution? End all poverty programs? Provide all
citizens a poverty level income stipend? What do you think? What have
you been told is the way to avoid being trapped in poverty?
D 5:05 / 5:58
* YouTube [3
CC
The economic theory that explains why citizens become caught in the American poverty trap?
Select one:
a. diminishing returns to production
b. rational self-interest
c. labor theory of work versus leisure tradeoff
d. labor specialization
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