Lewis Honors College Capstone Collection

Year of Publication

2015

College

Arts and Sciences

Department/School/Program

Economics

Degree Name

B.S. in Mathematical Economics

First Capstone/Thesis Advisor

Dr. Chris Bollinger

Abstract

This paper analyzes the impact of welfare participation during childhood on adult income. In the United States, welfare programs have a long history originating from the 1800s, and over $20 billion are currently allocated to various anti-poverty programs, such as Aid to Families with Dependent Children and Supplemental Security Income. Many people believe that these programs effectively eradicate childhood poverty. However, ordinary least squares and instrumental variables regression models suggest welfare programs are counterproductive. On average, holding all else constant, with 95% confidence, the total dollar amount of funding received from welfare programs during childhood is statistically significant to a 4% decrease in adult income. These results imply welfare assistance is the cause of decreased income. A more reasonable analysis is that welfare assistance is an indicator of the existence of poverty, and poverty hardships are not overcome by the current funding methods. This paper examines the methodology for reaching this conclusion and indicates areas of future research to improve the welfare system in the United States.

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