Negative Sample Case: Income Inequality
Updated: Aug 10
Contention 1 is Employment
Despite having negative stigmas, welfare does not disincentivize work. In 2015, Abhijit Banerjee of MIT analyzed data from 7 public welfare programs and found that 0 of them lead to laziness or reduced employment. In fact, means-tested welfare programs get people working in 4 ways.
First, by encouraging entrepreneurship. Derek Thompson of the Atlantic writes in 2012 that the social safety net allows low-income Americans to become entrepreneurs and take risks without worrying about losing everything. Carmen Noble of Harvard quantifies in 2014 that welfare programs over the past 2 decades increased entrepreneurship by 23%. Small businesses are the basis for social mobility; The Goldwater Institute finds in 2012 that every 1 percentage point increase in entrepreneurship reduces poverty by 2 percent.
Second, through child care subsidies. Blau of the National Bureau of Economic Research finds in 2000 that means tested welfare programs that provide money for parents to pay for child care allow them to spend more time at work, increasing employment by 7%, and wages by 12%.
Third, with job-training programs. Means-tested jobs programs dramatically help the unemployed. Sarah Bernhard of the Institute for Employment Research finds in 2012 that job-training and vocational education programs increase the probability of getting a job by 13 percentage points.
Fourth, by providing a cash incentive for work. Sherman of the CBPP writes in 2012 that over twice as much welfare spending goes to people with jobs than those without jobs. Much of this spending goes to The Earned Income Tax Credit, which provides monetary benefits to low-income families only if they are employed, and has encouraged millions to get jobs. In fact, Hilary Hoynes of UC Berkeley finds in 2015 that every 1000 dollar increase in the EITC increases employment by 7.3 percentage points and reduces the number of families in poverty by 9.4 percentage points.
The ESRC explains in 2012 that having a job is necessary for gaining wealth in the long term and reducing income inequality.
Contention 2 is Homelessness
The CBPP finds in 2015 that Rental Assistance, Public Housing and other programs for poor families gives 10 million people, including 4 million children, the chance to own a home.
People need houses because homelessness ruins lives. Scott Smith of the US Conference of Mayors reports in 2013 that 81% of homeless people are unemployed because lacking a stable home makes it difficult to hold down a job.
The Family Housing Fund adds in 1999, that homelessness dooms children to terrible social and educational outcomes, as 75% of homeless children perform below grade level in school.
Stable housing is necessary for financial success. Homelessness locks families into a cycle of poverty and impedes any hope of climbing the income bracket.
Contention 3 is Robin Hood.
Richard Posner of The University of Chicago explains in 2013 that means-tested welfare programs are funded by progressive taxes whose burden falls heavily on the rich. This is a great system because stealing from the rich to give to the poor by definition reduces income inequality.
Unsurprisingly, increased levels of welfare spending empirically reduces inequality.
Howard Glennerster of the London School of Economics finds that in 2008 that in the UK, spending on redistributive policies reduced the Gini Coefficient by a whopping 22 percentage points.
The OECD reports in 2012 that welfare states like Denmark, Norway, Iceland, and Sweden, have dramatically less income inequality than do nations who spend less heavily on redistributive welfare programs like The US, Turkey, and Mexico.
Furthermore, Judith Niehues of the IZA finds in 2010 that even when considering any potential negative disincentives that anti-welfare politicians like to complain about, the redistributive effects of welfare spending still outweigh.
Ultimately, Danilo Trisi of the CBPP finds in 2015 that in the US, means-tested welfare programs keep over 27 million people out of poverty.