The Real Poverty Trap

Here's an excerpt from Dr. Krugman's blog  --  follow link to read the rest of it.
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http://krugman.blogs.nytimes.com/

Earlier I noted that the new Ryan poverty report makes some big claims about the poverty trap, and cites a lot of research — but the research doesn’t actually support the claims. It occurs to me, however, that the whole Ryan approach is false in a deeper sense as well.

How so? Well, Ryan et al — conservatives in general — claim to care deeply about opportunity, about giving those not born into affluence the ability to rise. And they claim that their hostility to welfare-state programs reflects their assessment that these programs actually reduce opportunity, creating a poverty trap. As Ryan once put it,

we don’t want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.

OK, do you notice the assumption here? It is that reduced incentives to work mean reduced social mobility. Is there any reason to believe this as a general proposition?

Now, as it happens the best available research suggests that the programs Ryan most wants to slash — Medicaid and food stamps — don’t even have large negative effects on work effort. There is, however, some international evidence that generous welfare states have an incentive effect: America has by far the weakest safety net in the advanced world, and sure enough, the American poor work much more than their counterparts abroad:.   ....................................