“Welfare makes people lazy.” The notion is buried so deep within mainstream political thought that it can often be stated without evidence. It was explicit during the Great Depression, when Franklin D. Roosevelt’s WPA (Works Progress Administration) was nicknamed “We Piddle Around” by his detractors. It was implicit in Bill Clinton’s pledge to “end welfare as we know it.” Even today, it is an intellectual pillar of conservative economic theory, which recommends slashing programs like Medicaid and cash assistance, partly out of a fear that self-reliance atrophies in the face of government assistance.
Many economists have for decades argued that this orthodoxy is simply wrong—that wisely designed anti-poverty programs, like the Earned Income Tax Credit, actually increase labor participation. And now, across the world, a fleet of studies are converging on the consensus that even radical welfare programs—including basic-income programs and what are called conditional cash transfers—don’t make people any less productive.
Most notably, a 2015 meta-study of cash programs in poor countries found “no systematic evidence that cash transfer programs discourage work” in seven different countries: Mexico, Nicaragua, Honduras, the Philippines, Indonesia, or Morocco. Other studies of cash-grant experiments in Uganda and Nigeria have found that such programs can increase working hours and earnings, particularly when the beneficiaries are required to attend classes that teach specific trades or general business skills.
Welfare isn’t just a moral imperative to raise the living standards of the poor. It’s also a critical investment in the health and future careers of low-income kids.
Take, for example, the striking finding from a new paper from researchers at Georgetown University and the University of Chicago. They analyzed a Mexican program called Prospera, the world’s first conditional cash-transfer system, which provides money to poor families on the condition that they send their children to school and stay up to date on vaccinations and doctors’ visits. In 2016, Prospera offered cash assistance to nearly 7 million Mexican households.
In the paper, researchers matched up data from Prospera with data about households’ incomes to analyze for the first time the program’s effect on children several decades after they started receiving benefits. The researchers found that the typical young person exposed to the program for seven years ultimately completed three more years of education and was 37 percent more likely to be employed. That’s not all: Young Prospera beneficiaries grew up to become adults who worked, on average, nine more hours each week than similarly poor children who weren’t enrolled in the program. They also earned higher hourly wages.
This finding has direct implications for the United States, where a core mission of the Republican Party is to reduce government aid to the poor, on the assumption that it makes them lazy. This attitude is supported by many conservative economists, who argue that government benefits implicitly reward poverty and thus encourage families to remain poor—the idea being that some adults might reject certain jobs or longer work hours because doing so would eliminate their eligibility for programs like Medicaid.
But this concern has little basis in reality. One of the latest studies on the subjectfound that Medicaid has “little if any” impact on employment or work hours. In research based in Canada and the U.S., the economist Ioana Marinescu at the University of Pennsylvania has found that even when basic-income programs do reduce working hours, adults don’t typically stay home to, say, play video games; instead, they often use the extra cash to go back to school or hold out for a more desirable job.
But the standard conservative critique of Medicaid and other welfare programs is wrong on another plane entirely. It fails to account for the conclusion of the Prospera research: Anti-poverty programs can work wonders for their youngest beneficiaries. It’s true north of the border, as well. American adults whose families had access to prenatal coverage under Medicaid have lower rates of obesity, higher rates of high-school graduation, and higher incomes as adults than those from similar households in states without Medicaid, according to a 2015 paper from the economists Sarah Miller and Laura R. Wherry. Another paper found that children covered by Medicaid expansions went on to earn higher wages and require less welfare assistance as adults.
“Welfare helps people work” may sound like a strange and counterintuitive claim to some. But it is perfectly obvious when the word people in that sentence refers to low-income children in poor households. Poverty and lack of access to health care is a physical, psychological, and vocational burden for children. Poverty is a slow-motion trauma, and impoverished children are more likely than their middle-class peers to suffer from chronic physiological stress and exhibit antisocial behavior. It’s axiomatic that relieving children of an ambient trauma improves their lives and, indeed, relieved of these burdens, children from poorer households are more likely to follow the path from high-school graduation to college and then full-time employment.
Many economists have for decades argued that this orthodoxy is simply wrong—that wisely designed anti-poverty programs, like the Earned Income Tax Credit, actually increase labor participation. And now, across the world, a fleet of studies are converging on the consensus that even radical welfare programs—including basic-income programs and what are called conditional cash transfers—don’t make people any less productive.
Most notably, a 2015 meta-study of cash programs in poor countries found “no systematic evidence that cash transfer programs discourage work” in seven different countries: Mexico, Nicaragua, Honduras, the Philippines, Indonesia, or Morocco. Other studies of cash-grant experiments in Uganda and Nigeria have found that such programs can increase working hours and earnings, particularly when the beneficiaries are required to attend classes that teach specific trades or general business skills.Welfare isn’t just a moral imperative to raise the living standards of the poor. It’s also a critical investment in the health and future careers of low-income kids.
Take, for example, the striking finding from a new paper from researchers at Georgetown University and the University of Chicago. They analyzed a Mexican program called Prospera, the world’s first conditional cash-transfer system, which provides money to poor families on the condition that they send their children to school and stay up to date on vaccinations and doctors’ visits. In 2016, Prospera offered cash assistance to nearly 7 million Mexican households.
In the paper, researchers matched up data from Prospera with data about households’ incomes to analyze for the first time the program’s effect on children several decades after they started receiving benefits. The researchers found that the typical young person exposed to the program for seven years ultimately completed three more years of education and was 37 percent more likely to be employed. That’s not all: Young Prospera beneficiaries grew up to become adults who worked, on average, nine more hours each week than similarly poor children who weren’t enrolled in the program. They also earned higher hourly wages.
This finding has direct implications for the United States, where a core mission of the Republican Party is to reduce government aid to the poor, on the assumption that it makes them lazy. This attitude is supported by many conservative economists, who argue that government benefits implicitly reward poverty and thus encourage families to remain poor—the idea being that some adults might reject certain jobs or longer work hours because doing so would eliminate their eligibility for programs like Medicaid.
But this concern has little basis in reality. One of the latest studies on the subjectfound that Medicaid has “little if any” impact on employment or work hours. In research based in Canada and the U.S., the economist Ioana Marinescu at the University of Pennsylvania has found that even when basic-income programs do reduce working hours, adults don’t typically stay home to, say, play video games; instead, they often use the extra cash to go back to school or hold out for a more desirable job.
But the standard conservative critique of Medicaid and other welfare programs is wrong on another plane entirely. It fails to account for the conclusion of the Prospera research: Anti-poverty programs can work wonders for their youngest beneficiaries. It’s true north of the border, as well. American adults whose families had access to prenatal coverage under Medicaid have lower rates of obesity, higher rates of high-school graduation, and higher incomes as adults than those from similar households in states without Medicaid, according to a 2015 paper from the economists Sarah Miller and Laura R. Wherry. Another paper found that children covered by Medicaid expansions went on to earn higher wages and require less welfare assistance as adults.
“Welfare helps people work” may sound like a strange and counterintuitive claim to some. But it is perfectly obvious when the word people in that sentence refers to low-income children in poor households. Poverty and lack of access to health care is a physical, psychological, and vocational burden for children. Poverty is a slow-motion trauma, and impoverished children are more likely than their middle-class peers to suffer from chronic physiological stress and exhibit antisocial behavior. It’s axiomatic that relieving children of an ambient trauma improves their lives and, indeed, relieved of these burdens, children from poorer households are more likely to follow the path from high-school graduation to college and then full-time employment.
by Derek Thompson, The Atlantic | Read more:
Image: Kai Pfaffenbach / Reuters
