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Chapter 15: Q 19. (page 377)

Who are the near-poor?

Short Answer

Expert verified

Near-poor refers to those people who earn incomes just above the poverty line.

Step by step solution

01

Step 1.  Poor and near-poor

An individual is considered as poor when the income earned by the individual falls below the poverty line (the level of income required for attending the basic standard of living). The concept of near-poor is quite different from the concept of 'poor'.

02

Step 2. Near-poor

Individuals are considered as near-poor when they earn incomes which is just above the poverty line, that is, they earn a very little higher income than the subsistence level of income.

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Most popular questions from this chapter

How has the inequality of income changed in the

U.S. economy since the late 1970s?

Imagine that the government reworks the welfare policy that was affecting Jonathan in question 1, so that for each dollar someone like Jonathan earns at work, his government benefits diminish by only 30 cents. Reconstruct the table

from question 1 to account for this change in policy. Draw Jonathan’s labor-leisure opportunity sets, both for before

this welfare program is enacted and after it is enacted.

A group of 10 people have the following annual incomes: \(24,000, \)18,000, \(50,000, \)100,000, \(12,000,

\)36,000, \(80,000, \)10,000, \(24,000, \)16,000. Calculate the share of total income that each quintile receives from this

income distribution. Do the top and bottom quintiles in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution?

What are the main reasons economists give for the

increase in inequality of incomes?

The poverty rate would be substantially lower if the market value of in-kind transfers were added to family income. The largest in-kind transfer is Medicaid, the government health program for the poor. Lets say the program costs \(10,000 per recipient family.

a. If the government gave each recipient family a \)10,000 check instead of enrolling them in the Medicaid program, do you think that most of these families would spend that money to purchase health insurance? Why? (Recall that the poverty level for a family of four is about $25,000.)

b. How does your answer to part (a) affect your view about whether we should determine the poverty rate by valuing in-kind transfers at the price the government pays for them? Explain.

c. How does your answer to part (a) affect your view about whether we should provide assistance to the poor in the form of cash transfers or in-kind transfers? Explain.
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