The Benefits to Taxpayers from Increases in Students - RAND ...

Chapter Four
Spending on Social Support Programs
The United States has built an extensive safety net for the poor and needy. Increases in
educational attainment result in increases in earnings that, in turn, result in a reduced
likelihood that a person will draw on this safety net and a decrease in the amount of
benefit a person will receive from most social programs if he or she participates. In this
chapter, we estimate the effects of increased educational attainment on social support
program spending in each of the eight largest social support and insurance programs
for which sufficient data on program participation and spending are available.
Appendix C presents the empirical analyses used to estimate the effects of increased
educational attainment on participation in social programs and the resulting costs. 1
Background
The U.S. social support and insurance system includes some 400 programs in two
dozen federal departments and agencies. Some programs are administered jointly by
the federal and state governments. Social support programs can be broadly divided
into two categories.
The first category consists of social support programs that provide cash and noncash
benefits to members of low-income households in programs that provide direct
income support, medical support, food and nutrition, and housing. Major programs
of this type include the Temporary Assistance for Needy Families, Earned Income
Tax Credit, housing subsidies, the Supplemental Nutrition Assistance Program (food
stamps), SSI, and Medicaid.
The second category consists of social insurance programs that replace the lost
income of people who cannot work because of old age, disability, severance, etc. Major
programs of this type include Medicare, Unemployment Insurance, and Social Secu-
1
The education variables are jointly significant in all social program utilization and income models at
the 0.05 level or better, except for welfare income, food stamp income, and Unemployment Insurance
income of men; hospitalization of women; and SSI income of men and women over 64. For details, see
Appendix C.
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