Nova workboard

a blog from young economists at Nova SBE

The Welfare system and its programs

The welfare state has a very important role in the protection of its citizens and in the promotion of a global well being. However, its actions may lead to some unintended negative effects.

It is discussed that America’s welfare state may not be working as well as it should (http://www.economist.com/news/united-states/21585010-americas-welfare-state-not-working-nearly-well-it-should-taxing-hard-up-americans), and this happens due to the fact that welfare recipients become dependent on the help of the State instead of considering its help as an incentive to look for a job.

Given this problem, America has tried to alter its policies in order to achieve the result intended by the creation of a welfare state.

In order to do so, it was created the Temporary Assistance for Needy Families (TANF), a program that aimed at helping people find a job, and became a temporary help (http://www.hhs.gov/recovery/programs/tanf/index.html).

This new program was created in order to try to mitigate those unwanted effects, by limiting cash benefits and forcing people who are able to work to do so. This new criterias had good reactions, by decreasing the number of people under the assistance of this program by more than 30%, and increasing employment for single mothers. (http://www.economist.com/news/united-states/21585010-americas-welfare-state-not-working-nearly-well-it-should-taxing-hard-up-americans).

The State’s main tool is the earned-income tax credit, which increases the income of a poor family until it is achieved a certain point, after this the help is gradually decreased.

Although this tax credit was considered a success, it may still cause some the consequences described above, given that people become less encourage to increase their income, due to the withdrawal of the benefits.

Another negative impact of this new program was  the increased difficulty of the people who were able to work to receive benefits, raising the number of people claiming to be disabled. This led to an increase of benefits to the disable, even though most of the people who claimed to be so, were not.

So, even though this new program had some good effects, it also provided negative consequences. As a result, I do believe that it is quite difficult to understand how to improve these types of programs, because they will always lead to positive and negative results.

Maria Almeida #637

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Author: studentnovasbe

Master student in Nova Sbe

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