Learning objectives of this chapter include: Distinguish between the private and public sector approaches to project evaluation; explain the net present value approach to project evaluation and compare it with the internal rate of return and the benefit-cost ratio; show why, under ideal conditions, public sector projects should strive to maximise consumer (and producer) surplus;. | EXPENDITURE PROGRAMS FOR THE POOR Chapter 13 A Quick Look at Welfare Spending Means-tested Cash versus in-kind assistance Anti-poverty impact of non-means-tested programs Federal Expenditures on Major Need-Tested Programs (2009) Program Federal Expenditures ($) Health Cash aid Food assistance Housing and development Education Social Services Energy assistance Source: Spar [2011,] Employment and training 13- TANF Aid to Families with Dependent Children (1935-96) TANF-Temporary Assistance for Needy Families (1996-?) No entitlement Time limits Work requirement Fixed $ Block grants to states States have much flexibility and authority over structure of their welfare system Benefit reduction rates 13- Work Incentives B = G – tE B = 0 if E = G/t Challenge: How to provide an adequate income support program while minimizing work disincentives? 0 The Basic Trade-offs G – basic grant if not working t – rate at which grant reduced . | EXPENDITURE PROGRAMS FOR THE POOR Chapter 13 A Quick Look at Welfare Spending Means-tested Cash versus in-kind assistance Anti-poverty impact of non-means-tested programs Federal Expenditures on Major Need-Tested Programs (2009) Program Federal Expenditures ($) Health Cash aid Food assistance Housing and development Education Social Services Energy assistance Source: Spar [2011,] Employment and training 13- TANF Aid to Families with Dependent Children (1935-96) TANF-Temporary Assistance for Needy Families (1996-?) No entitlement Time limits Work requirement Fixed $ Block grants to states States have much flexibility and authority over structure of their welfare system Benefit reduction rates 13- Work Incentives B = G – tE B = 0 if E = G/t Challenge: How to provide an adequate income support program while minimizing work disincentives? 0 The Basic Trade-offs G – basic grant if not working t – rate at which grant reduced when recipient earns money B – benefit received 13- the higher G, the higher t higher G or lower t leads to a higher breakeven E which raises the costs of the system and includes more people w Analysis of Work Incentives Hours of leisure per month Income per month 0 T a D |Slope| = w b c 2w 13- Time endowment Analysis of Work Incentives Hours of leisure per month Income per month 0 T D |Slope| = w i ii iii E1 F G 13- Leisure Work Analysis of Work Incentives Hours of leisure per month Income per month (= earnings + transfers) 0 T D |Slope| = w Q F S $100 |Slope| = 3/4w K 13- Hours after TANF Hours before TANF Analysis of Work Incentives Hours of leisure per month Income per month (= earnings + transfers) 0 T D P F G $338 R P1 Budget constraint with t = 100% S 0 hours of work selected 13- Analysis of Work Incentives Hours of leisure per month Income per month (= earnings + transfers) 0 T D P M R E2 13- Hours worked Work Requirements When .
