CU-Boulder ECON 4211 - Welfare (37 pages)

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Welfare



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Welfare

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Lecture Notes


Pages:
37
School:
University of Colorado at Boulder
Course:
Econ 4211 - Economics of the Public Sector

Unformatted text preview:

WELFARE Kellen Schull Shannon Eklund Amanda Hong Presented October 25 2006 Econ 4211 Definition of Welfare Welfare is financial assistance paid by the government to individuals and families who are unwilling or unable to support themselves alone and or are perceived by the government to be able to function more effectively with financial assistance Welfare in this context is not the same as the measure of economic well being Types of Welfare Cash welfare are welfare programs that provide cash benefits to recipients In kind welfare are welfare programs that deliver goods rather than cash to recipients Medical care food and housing are all examples Types of Participants in Welfare Programs in the U S Categorical welfare means welfare programs are restricted by some demographic characteristic Single motherhood or disability are examples Means tested welfare are welfare programs that are restricted only by income and asset levels For example programs that restrict eligibility to those under 100 of the poverty line Justification for Government Intervention Social Welfare Well being Society cares about the well being of all its members Social welfare may be maximized by redistribution from high income individuals to low income individuals Low income individuals have a higher Marginal Propensity to Consume MRC and thus may increase economic activity Social Welfare Functions Utilitarian SWF SWF U1 U2 UN Utilities of all individuals are given equal weight Summed to get total social welfare Rawlsian SWF SW min U1 U2 UN Social welfare is determined by the minimum utility in society maximized by maximizing welfare of worst off person Why Government intervention Not likely to be an adequate market of redistribution in the Private sector Seen by many as the role of the government The Welfare State Take the burden off of families and individuals and place it on society Increase activity and promote consumption and economic Why not Government Intervention Promotes free riders and



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