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Public Policy and the Income Distribution

Public Policy and the Income Distribution

Alan J. Auerbach
David Card
John M. Quigley
Copyright Date: 2006
Published by: Russell Sage Foundation
Pages: 424
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  • Book Info
    Public Policy and the Income Distribution
    Book Description:

    Over the last forty years, rising national income has helped reduce poverty rates, but this has been accompanied by an increase in economic inequality. While these trends are largely attributed to technological change and demographic shifts, such as changing birth rates, labor force patterns, and immigration, public policies have also exerted a profound affect on the welfare of Americans. In Public Policy and the Income Distribution, editors Alan Auerbach, David Card, and John Quigley assemble a distinguished roster of policy analysts to confront the key questions about the role of government policy in altering the level and distribution of economic well being. Public Policy and the Income Distribution tackles many of the most difficult and intriguing questions about how government intervention — or lack thereof — has affected the incomes of everyday Americans. Rebecca Blank analyzes welfare reform, and presents systematic research on income, poverty rates, and welfare and labor force participation of single mothers. She finds that single mothers worked more and were less dependent on public assistance following welfare reform, and that low-skilled single mothers had no greater difficulty finding work than others. Timothy Smeeding compares poverty reduction programs in the United States with policies in other developed countries. Poverty and inequality are higher in the United States than in other advanced economies, but Smeeding argues that this is largely a result of policy choices. Poverty rates based on market incomes alone are actually lower in the United States than elsewhere, but government interventions in the United States were less than half as effective at reducing poverty as were programs in the other countries. The most dramatic poverty reduction story of twentieth century America was seen among the elderly, who went from being the age group most likely to live in poverty in the 1960s to the group least likely to be poor at the end of the century. Gary Englehardt and Jonathan Gruber examine the role of policy in alleviating old-age poverty by estimating the impact of Social Security benefits on the income of the elderly poor. They find that the growth in Social Security almost completely explains the large decline in elderly poverty in the United States. The twentieth century was remarkable in the extent to which advances in public policy helped improve the economic well being of Americans. Synthesizing existing knowledge on the effectiveness of public policy and contributing valuable new research, Public Policy and the Income Distribution examines public policy's successes, and points out the areas in which progress remains to be made.

    eISBN: 978-1-61044-020-2
    Subjects: Finance

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Contributors
    (pp. ix-x)
  4. Preface and Acknowledgments
    (pp. xi-xii)
    Alan J. Auerbach, David Card and John M. Quigley
  5. Chapter 1 Introduction
    (pp. 1-30)
    Alan J. Auerbach, David Card and John M. Quigley

    The postwar era in the United States has been a time of rising national income and unprecedented gains in the economic well-being of American households. This prolonged period of growth led to a reduction in poverty rates but was also associated with a rise in the inequality of wealth and family income. Concurrent changes in demographics—increased immigration, the baby boom and bust, shifts in marriage and living arrangements, and continued suburbanization—have affected labor markets, the demand for social services, and the overall distribution of well-being. At the same time, changes in transfer and entitlement programs have affected the...


    • Chapter 2 What Did the 1990s Welfare Reforms Accomplish?
      (pp. 33-79)
      Rebecca M. Blank

      In August 1996, Congress passed and President Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Many pieces of legislation are heralded as “pathbreaking reform” when they are passed. PRWORA was an exception in that such a claim has turned out to be correct. The changes that PRWORA initiated, along with several related policy changes that occurred at the same time, have fundamentally altered the ways in which we provide assistance to low-income families in the United States. The implications of these changes are only beginning to be understood. This paper reviews the provisions of PRWORA...

    • Chapter 3 The Take-Up of Social Benefits
      (pp. 80-148)
      Janet Currie

      This chapter offers a review of recent literature regarding the take-up of social programs in the United States and the United Kingdom. A few general conclusions are drawn: First, take-up is enhanced by automatic or default enrollment and lowered by administrative barriers, although removing individual barriers does not necessarily have much effect, suggesting that one must address the whole bundle. Second, although it may be impossible to devise a definitive test of the hypothesis that eligible people fail to take up benefits because of stigma, other, more concrete types of transactions costs are probably a good deal more important. Third,...

    • Chapter 4 Government Programs and Social Outcomes: Comparison of the United States with Other Rich Nations
      (pp. 149-218)
      Timothy M. Smeeding

      The United States has a long tradition of measuring income poverty and income inequality and weighing the effectiveness, successes, and failures of government policies aimed at poverty reduction. In our own way we have created a unique set of social policies that support widely held values and provide stories of both success and failure in reaching goals of poverty reduction and improved social outcomes for all Americans. But still our idiosyncrasies leave many questions to be answered.

      One can ask whether, in fact, Americans have “left no child behind.” And the answers depend very much on who one asks and...


    • Chapter 5 Income and Wealth Concentration in a Historical and International Perspective
      (pp. 221-258)
      Emmanuel Saez

      Recent studies have used tax statistics to construct top-income and wealth-shares series over the twentieth century for the United States and Canada and for a number of European countries: the United Kingdom, France, the Netherlands, and Switzerland. In the first part of the century, all countries except Switzerland experienced a dramatic drop in top-income shares—the percentage of a country’s wealth controlled by the wealthiest—owing to a precipitous drop in large-wealth holdings. A plausible explanation is that the development of very progressive tax systems prevented large fortunes from recovering from the shocks of the world wars and the Great...

    • Chapter 6 Social Security and the Evolution of Elderly Poverty
      (pp. 259-287)
      Gary V. Engelhardt and Jonathan Gruber

      One of the most striking trends in elderly well-being in the twentieth century was the dramatic decline in poverty among the elderly. The official poverty rate of those sixty-five years and older was 35 percent in 1960, more than twice that of the non-elderly (those aged eighteen to sixty-four), but by 1995 it had fallen to 10 percent, and to below that for the non-elderly. Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk (1988) found similar steep declines in elderly poverty going back to 1939. This poverty reduction among the elderly exceeded that for any other group in society.

      The rapid...

    • Chapter 7 The Measurement and Evolution of Health Inequality: Evidence from the U.S. Medicare Population
      (pp. 288-316)
      Jonathan Skinner and Weiping Zhou

      The technological revolution in health care has brought both great benefits with respect to survival and general well-being, and substantial increases in costs.¹ Whether these changes have reduced inequality in health care or in health outcomes is not well understood. Earlier research suggested that medical-care innovations, such as the use of antibiotics in the treatment of tuberculosis, reduced health-care disparities by race (McDermott 1978). On the other hand, studies of health-care expenditures by income group found higher income groups accounting for a larger fraction of spending, particularly after accounting for health status.² Recent studies also suggest that better-educated patients get...


    • Chapter 8 The Socioeconomic Status of Black Males: The Increasing Importance of Incarceration
      (pp. 319-358)
      Steven Raphael

      Over the past three decades, the average socioeconomic status of African American males has deteriorated, absolutely and relative to men from other racial and ethnic groups. Despite gains in relative earnings immediately following passage of the Civil Rights Act, the relative earnings of black men have stagnated since the mid-1970s (Bound and Freeman 1992). In addition, employment rates among noninstitutionalized black men have declined markedly, with pronounced declines for the relatively less-educated (Holzer and Offner 2002).

      Concurrent with these adverse labor-market trends is a phenomenal increase in the proportion of black men involved in one form or another with the...

    • Chapter 9 Public Health and Mortality: What Can We Learn from the Past?
      (pp. 359-398)
      Dora L. Costa and Matthew E. Kahn

      City life in the nineteenth and early twentieth century was dirty and dangerous (Melosi 2000). The water and milk supply of cities was contaminated with bacteria that caused typhoid fever, dysentery, and diarrhea. Cities did not remove sewage and their streets were filled with garbage and carrion. The influx of migrants from abroad and from rural areas who crowded into dank and dark urban tenements provided new foci of infection and new victims, and the rapid transmission of disease from host to host increased the diseases’ virulence. An infant in a large city in 1890 was 88 percent more likely...

  9. Index
    (pp. 399-412)