[ECON 375] - Midterm Exam Guide - Comprehensive Notes for the exam (52 pages long!)

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7 Feb 2017

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Western Kentucky University
ECON 375
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Lecture 14: Poverty
Criminal Records Create Endless Cycle of Poverty
US criminal justice system has kept people in a cycle of poverty and jail
Mass incarceration is a principle driver of inequality in America (particularly among blacks)
Criminal record is cause and consequence of poverty
Cause: obstacle to employment, housing, public assistance, education, and family reunification
Consequence: criminalization of poverty and homelessness
Blanket bans on providing people with criminal records housing and public assistance
Criminal background checks screen out people
Treated as criminals forever; no social mobility
Estimated cost of employment losses among those w criminal record = $65 billion per year
Stop background checks, advocate fair chance hiring, eliminate one-strike housing, reform policies
How is Poverty Status related to age?
Nation poverty rate is 15%
21% under 18; 14% between 18 to 64; 10% over 65
More children in poverty relative to their share of the population
What are Poverty Rates among working adults?
Overall poverty rate between 18 to 64: 14%
Those who do not work are more in poverty relative to their share of population (62% to 25%)
How does level of education relate to poverty?
Overall poverty rate for >25 older: 12%
Bachelors or higher: 5%; Some college, no degree: 10%; High school diploma: 14%; 29% no HS diploma
People with no HS diploma comprise a far greater share of pop in poverty than share of general pop
Out of Wedlock Births
Hispanics have the most kids, but black people have the most wedlock births (increasing over time)
People living below poverty line in East Asia has been decreasing, but increasing in South Asia and
The Correct US Poverty Rate is around and about zero
Back when: poverty alleviation was done by giving poor people cash money
US now spends a great deal on poverty alleviation
Same poverty standards- measures the # of people who are poor before we give them money
4 major poverty reduction programs: Medicaid, SNAP, EITC, and Section8 Vouchers- do not include
them in our current estimates of poverty
Definition of poverty has not changed (3x a low cost food budget in 1960s adjusted for inflation)
Consumption poverty is around zero in the US
Europe: poor people are those who earn less than half the income of a typical citizen
Poverty rate here higher than any other nation
Below 60% median income- relative poverty; & below 50% median income- absolute poverty
Relative poverty is a measure of inequality
Family structure, childbearing, and parental employment
Single parent families are more likely to be poor- without both biological parents = more risks
Family structures are massively changing
Poverty- insufficient resources relative to needs
Increased financial needs of a larger family increases chance of poverty- second adult reduces chance
Adds more to potential income than to needs
Decline in marriage and increase in divorce has increased poverty
Declining number of child per women is a reduction in poverty- less overall need & more time to work
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Decline in married women fertility + less married women led to a larger number of wedlock babies
Families are less likely to be poor w greater # of adults and fewer # of children
Men in household are less likely to be poor but this is changing do to ops for women
Declines in marriages (waiting until later; higher rates of divorce- women don’t have an incentive to
marry men because they don’t make that much anymore), reduction in # of children, increase in wedlock
Women’s employment increased and men have declining rates of employment
The economic advantage of marriage has declined, so it isn’t a precursor to parenthood
Welfare benefits single parents a lot more than married- increased child support enforcement reduces the
number of non-marital births
Changes in family structure would have led to substantial increase in poverty, but growth of female
employment balanced it out
There is a growing number of workers who have primary responsibility for caring for their children
Relative vs Absolute Poverty
Absolute- lack of one or more basic needs over a period long enough that it endangers your life
Relative poverty- covers biological needs: food, water, clothes, house, and sanitation
Extreme poverty- amount of income needed to satisfy most basic needs (absolute and healthcare)
There are many different causes and effects of poverty that cannot be related to $
China’s modernization has been a major reason for the poverty decline
It is impossible to compare poverty of industrialized countries to others ($1 a day is different)
Absolute poverty challenged by conceptions of what basic needs are
However, we can instinct see visible hardship- absolute poverty
Challenge of defining basic needs- absence of major harm (life expectancy)
Ethical poverty line by Peter Edward- $1.9 a day for undeveloped countries
Puts 40% of population into poverty- $2.7 would put nearly half of world in poverty
To lift everyone out of poverty, half of US pop and 30% of Up would have to give away 30% of income
Income redistribution would hurt the middle and low class of developed countries
Extreme levels of consumption put a strain on impoverished workers
Apply relative poverty to richer countries- have more access to services
Poor countries need absolute poverty to make sure basic needs are addressed
Universal characteristic of absolute poverty is state of health and life expectancy
Understanding Poverty in America
Not that many people are actually in poverty
Own their own houses, have A/C, not overcrowded, lots of living space, have car, have TV
Wide range of living conditions among the poor though
Kids are poor: parents don’t work and fathers are absent from home
Work 40 hours a week and 75% of kids would be lifted out of poverty
Same for if dads married moms
Welfare programs reward idleness and penalize marriage
Today’s “poor” equate to the median American household in the 1970s
Poor children are super nourished- same nourishment as middle class
Thin and stiltedness are rare- much better than the global level
Poverty- inability to provide a family w food, clothing, and shelter
Most houses are nice and owned by owners and not a lot of crowding
US housing is almost twice that of European housing
There is no evidence of poverty induced malnutrition in the US
Hunger- uneasy sensation caused by lack of food- short term and episodic
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