Economics of Welfare Reform (ECON 3050)

Course Description

This course deals with the U.S. welfare system. The welfare system is a set of government programs that provide benefits to households with incomes below certain levels, albeit different levels for different programs. The major programs that provide such assistance are Medicaid, Public Housing, Housing Vouchers, Food Stamps, Women, Infants, and Children Nutrition Program (WIC), Temporary Assistance to Needy Families (TANF), Supplemental Security Income (SSI), and the Earned Income Tax Credit (EITC). We’ll discuss the justifications for each major type of assistance, consider evidence on the effects of the programs covered, and use economic theory to understand why the programs have these effects. We’ll be particularly concerned with whether the programs have effects that are consistent with their justifications and how they can be redesigned to better achieve their goals.

A key feature of the course is student presentations. Most students in the class will work with two others to develop a 15-minute class presentation on how the welfare system should be changed to better serve the interests of recipients and taxpayers. (If the number of students in the class is not an integer multiple of three, a few groups will be smaller or larger.) Each student in the group will speak for about 5 minutes. The proposals can range from minor tinkering with current programs to fundamental reforms that involve eliminating all of these programs and introducing entirely new programs. The programs don’t have to be of the type studied. For example, you could propose to increase greatly the salaries of newly hired teachers in public schools in the poorest neighborhoods in order to hire much better teachers. Other students will give presentations of the same length on one of several alternative topics provided that a sufficient number of students want to work together on that topic.  In the past these topics have included the treatment of immigrants under welfare programs, job training programs, child care subsidies, and minimum wage laws. Other topics are possible if enough students are interested. Each group’s presentation will be discussed by the entire class. The presentations will occur during the last four class periods, and they will count 40 percent of the final grade.

A serious course on this topic requires the heavy use of some material from intermediate microeconomics ECON 3010, and ECON 3050 is a serious course on welfare policy. I’ll present the essential material from 3010 for the purposes of this course in the first three lectures. The course is designed for students who have not taken ECON 3010 but are comfortable with quantitative material. The majority of students who have taken 3050 in the past hadn’t completed ECON 3010 earlier.

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