Helping Families Avoid the Two-Income Trap
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The paper looks the argument in "The Two-Income Trap" by Elizabeth Warren and Amelia Warren Tyagi that middle-class, two-income families are more likely to have severe financial difficulties because they buy homes that they can barely afford, leaving fewer savings to cover the costs of living in case of financial disaster. The paper examines the authors' proposals of how individual family change and policy change may help families avert financial ruin and avoid the two-income trap. The paper goes on to show how these authors' approaches to addressing the two-income trap problem are promising, but they suffer from many flaws, the main one being that the solutions are expensive and would probably require tax increases. The paper explains that the potential for tax increases is likely to result in political opposition, causing delays in executing and testing the possible solutions.
From the Paper:"The authors cite much evidence to argue that parents' incomes are not being spent frivolously on goods they don't really need, but instead on paying for a home in a safe neighborhood with good schools (Warren and Warren Tyagi, 2003, p 23). The authors point out that school quality is the most important factor in determining home prices in a neighborhood (Warren and Warren Tyagi, 2003, p 24). Another important factor that determines home price is safety from violence and drugs. Parents desire to provide their children with a safe home in a neighborhood with high-quality schools, and the authors argue that these are the most important reasons that parents buy homes that even two-income families have difficulty affording (Warren and Warren Tyagi, 2003, p. 28).
"The authors propose several solutions for the two-income trap. Their first proposed solution is a voucher system that would use tax money to allow parents to send children to the school of their choice (Warren and Warren Tyagi, 2003, p. 34). One argument the authors point out against this solution is that such a partial subsidy voucher system may drain money away from public schools and into private schools (Warren and Warren Tyagi, 2003, p. 34). This would then force less well-off students to remain in a failing public school system while their more well-off peers use partial subsidies to attend private schools (Warren and Warren Tyagi, 2003, p. 34)."
Sample of Sources Used:
- Warren, E. and Warren Tyagi, A. (2003). The Two-Income Trap. Why Middle Class Mothers and Fathers are Going Broke. New York: Basic Books.
Cite this Book Review:
Helping Families Avoid the Two-Income Trap (2013, May 08) Retrieved August 10, 2020, from https://www.academon.com/book-review/helping-families-avoid-the-two-income-trap-153232/
"Helping Families Avoid the Two-Income Trap" 08 May 2013. Web. 10 August. 2020. <https://www.academon.com/book-review/helping-families-avoid-the-two-income-trap-153232/>