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poverty rate
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the percentage of the population whose family income falls below an absolute level called the poverty line
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poverty line
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an absolute level of income set by the federal government for each family size below which a family is deemed to be in poverty
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in-kind transfers
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transfers to the poor given in the form of goods and services rather than cash i.e. food stamps, medicaid
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life cycle
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the regular pattern of income variation over a person's life
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utilitarianism
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the political philosophy according to which the government should choose policies to maximize the total utility of everyone in society
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liberalism
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the political philosophy according to which the government should choose policies deemed just, as evaluated by an impartial observer behind a "veil of ignorance"
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maximin criterion
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the claim that the government should aim to maximize the well-being of the worst-off person in society
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libertarianism
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the political philosophy according to which the government should punish crimes and enforce voluntary agreements, but not redistribute income
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welfare
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government programs that supplement the incomes of the needy, i.e. TANF, SSI
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negative income tax
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a tax system that collects revenue from high-income households and gives subsidies to low-income households, i.e. EITC
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Distortion of incentives
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Results from government policies to redistribute income to attain equity
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Invisible Hand
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acts to allocate resources efficiently but not necessarily ensure fairness
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Measurements of income equality uses
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lifetime income not annual
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Increase in demand for skilled labor
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explains rise in income inequality in US from 1970-2008
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Distribution of income
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tends to be more equal in rich nations than poor
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