Question: Means-tested transfer payments reduce the current poverty rate. However, they also create an incentive structure that discourages self-sufciency and self-improvement. Thus, they tend to increase

“Means-tested transfer payments reduce the current poverty rate. However, they also create an incentive structure that discourages self-sufciency and self-improvement.

Thus, they tend to increase the future poverty rate.

Welfare programs essentially purchase a lower poverty rate today in exchange for a higher poverty rate in the future.” Evaluate this statement.

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