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The Negative Income Tax and the Evolution of U.S. Welfare Policy

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Author Info
Robert A. Moffitt

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Abstract

The negative income tax proposed by Milton Friedman represents one of the fundamental ideas of modern welfare policy. However, the academic literature has raised two difficulties with it, one challenging its purported work incentives and the other suggesting the possible superiority of work requirements. In addition, work requirement approaches have gained ground in actual U.S. welfare policy over the last 30 years and the number of different programs has proliferated, another development counter to the negative income tax. On the other hand, the Earned Income Tax Credit has produced a negative-income-tax-like program on a vast scale.

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Publisher Info
Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 17 (2003)
Issue (Month): 3 (Summer)
Pages: 119-140
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Handle: RePEc:aea:jecper:v:17:y:2003:i:3:p:119-140

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Robert Moffitt, 2001. "The Temporary Assistance for Needy Families Program," Economics Working Paper Archive 463, The Johns Hopkins University,Department of Economics.
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  2. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March. [Downloadable!] (restricted)
  3. James J. Heckman, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 136-169 National Bureau of Economic Research, Inc. [Downloadable!]
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  4. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February. [Downloadable!] (restricted)
  5. Bruce, Neil & Waldman, Michael, 1991. "Transfers in Kind: Why They Can Be Efficient and Nonpaternalistic," American Economic Review, American Economic Association, vol. 81(5), pages 1345-51, December. [Downloadable!] (restricted)
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  6. Charles Brown & Wallace E. Oates, 1987. "Assistance to the Poor in a Federal System," NBER Working Papers 1715, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. V. Joseph Hotz, 2003. "The Earned Income Tax Credit," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 141-198 National Bureau of Economic Research, Inc. [Downloadable!]
  8. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Blackwell Publishing, vol. 38(114), pages 175-208, April. [Downloadable!] (restricted)
  9. Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September. [Downloadable!] (restricted)
  10. H. E. Frech III, 2003. "Introduction," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 10(2), pages 133-133, July. [Downloadable!] (restricted)
  11. Parsons, Donald O., 1996. "Imperfect 'tagging' in social insurance programs," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 183-207, October. [Downloadable!] (restricted)
  12. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-61, March. [Downloadable!] (restricted)
  13. Jan K. Brueckner, 2000. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
  14. Fortin, Bernard & Truchon, Michel & Beausejour, Louis, 1993. "On reforming the welfare system : Workfare meets the negative income tax," Journal of Public Economics, Elsevier, vol. 51(2), pages 119-151, June. [Downloadable!] (restricted)
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  15. James J. Heckrnan, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 491-524 National Bureau of Economic Research, Inc. [Downloadable!]
  16. Auerbach, Alan J. & Hines, James Jr., 2002. "Taxation and economic efficiency," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 21, pages 1347-1421 Elsevier. [Downloadable!] (restricted)
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  17. Katherine Cuff, 2000. "Optimality of workfare with heterogeneous preferences," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 149-174, February. [Downloadable!] (restricted)
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  18. James Alm & Stacy Dickert-Conlin & Leslie A. Whittington, 1999. "Policy Watch: The Marriage Penalty," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 193-204, Summer. [Downloadable!] (restricted)
  19. Nichols, Albert L & Zeckhauser, Richard J, 1982. "Targeting Transfers through Restrictions on Recipients," American Economic Review, American Economic Association, vol. 72(2), pages 372-77, May. [Downloadable!] (restricted)
  20. Garfinkel, Irwin, 1973. "Is In-Kind Redistribution Efficient?," The Quarterly Journal of Economics, MIT Press, vol. 87(2), pages 320-30, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gurgand, Marc & Margolis, David N., 2005. "Does Work Pay in France? Monetary Incentives and the Guaranteed Minimum Income," IZA Discussion Papers 1467, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Robert Moffitt, 2006. "Welfare Work Requirements with Paternalistic Government Preferences," NBER Working Papers 12366, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Francesconi, Marco & van der Klaauw, Wilbert, 2004. "The Consequences of ‘In-Work’ Benefit Reform in Britain: New Evidence from Panel Data," IZA Discussion Papers 1248, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Jörg Lingens & Klaus Wälde, 2006. "Pareto-Improving Unemployment Policies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. repec:ese:iserwp: is not listed on IDEAS
  6. Abul Naga Ramses & Kolodziejczyk Christophe & Muller Tobias, 2004. "The Redistributive Impact of Alternative Income Maintenance Schemes: A Microsimulation Study using Swiss Data," Cahiers du Département d'Econométrie 2004.11, Département d'Econométrie, Université de Genève. [Downloadable!]
    Other versions:
  7. Michaud, P.C. & Vermeulen, F.M.P., 2004. "A collective retirement model : identification and estimation in the presence of externalities," Discussion Paper 75, Tilburg University, Center for Economic Research. [Downloadable!]
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  8. Allan H. Meltzer, 2003. "Choosing freely: the Friedmans' influence on economic and social policy," Proceedings, Federal Reserve Bank of Dallas, issue Oct, pages 191-205. [Downloadable!]
  9. Marc Gurgand & David Margolis, 2008. "Does Work Pay in France ? Monetary Incentives, Hours Constraints and the Guaranteed Minimum Income," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00202299_v1, HAL. [Downloadable!]
    Other versions:
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