Increasing unemployment, the changing composition of the poverty population, and the effects of government transfers on work incentives all contribute to the increase in the pre-transfer poverty rate.

Question

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Increasing unemployment means fewer people have jobs and therefore have less income, contributing to the pre-transfer poverty rate. The changing composition of the poverty population refers to shifts in demographics, such as an increase in single-parent households or elderly individuals, who may be more likely to experience poverty. Government transfers, such as welfare or food stamps, can provide a safety net for those in need, but may also reduce work incentives for some recipients. These factors all contribute to the increase in the pre-transfer poverty rate.

Increasing Unemployment, the Changing Composition of the Poverty Population, and the Effects