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Welfare transfers and intra-household trickle down: a model with evidence from the US Food Stamp Program

Breunig, Robert; Dasgupta, Indraneel


We examine the case for maintaining welfare and income redistribution programs even when their adverse general equilibrium effects reduce total earnings of poor households. Using a Cournot model of intra-household decision-making, we show that even if welfare cutbacks generate large increases in household income, these may still reduce the well-being of children and elderly dependants. Our model also explains the higher marginal propensity to consume food out of food stamps in the US, compared...[Show more]

CollectionsANU Research Publications
Date published: 2003
Type: Working/Technical Paper


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