A Comparative Analysis of the US and Korea
KDI/EWC series on Economic Policy
Edited by John Karl Scholz, Hyungypo Moon and Sang-Hyup Lee
Chapter 9: Recent developments in antipoverty policies in the United States
James Ziliak surveys recent developments in antipoverty policies in the United States and evaluates their effectiveness. He begins with an overview of major programs and substantial growth in the social safety net and how they affect poverty and its correlates. Raising the question of what accounts for this spending boom in the social safety net, the author finds that the answer varies widely across programs. Typically it can be accounted for by changing demographics, business cycles, policy implementation and, in some cases, policy reform. Participation in the food-stamps program, for example, moves counter-cyclically with the business cycle, and thus the increased expenditure since 1999 resulted in part from the weak economy. The Earned Income Tax Credit is a refundable tax credit available to low-income families and individuals, but only those in the labor market. As a consequence of the changing labor force composition and policy, expenditures on this tax credit make it the largest cash assistance program to low-income working persons. By contrast, increased spending on disability insurance took place not through policy reform but as a result of changes in the implementation of program rules, combined with an increase in the proportion of the population applying for benefits.
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