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Welfare Work Requirements with Paternalistic Government Preferences

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  • Robert Moffitt

Abstract

Work requirements in means-tested transfer programs have grown in importance in the U.S. and in some other countries. The theoretical literature which considers their possible optimality generally operates within a traditional welfarist framework where some function of the utility of the poor is maximized. Here we consider a case where society is paternalistic and instead has preferences over the actual work allocations of welfare recipients. With this social welfare function, optimality of work requirements is possible but depends on the accuracy of the screening mechanism which assigns work requirements to some benefit recipients and not others. Numerical simulations show that the accuracy must be high for such optimality to occur. The simulations also show that earnings subsidies can be justified with the type of social welfare function used here.

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Bibliographic Info

Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 534.

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Date of creation: Jun 2005
Date of revision: Jun 2006
Handle: RePEc:jhu:papers:534

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  1. Emmanuel Saez, 2000. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," NBER Working Papers 7708, National Bureau of Economic Research, Inc.
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  16. Katherine Cuff, 1998. "Optimality of Workfare with Heterogeneous Preferences," Working Papers 968, Queen's University, Department of Economics.
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Cited by:
  1. Ruggero Paladini, 2014. "Da Bentham alla tassazione ottimale," Public Finance Research Papers 2, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome.
  2. Aaberge, Rolf & Flood, Lennart, 2013. "U.S. versus Sweden: The Effect of Alternative In-Work Tax Credit Policies on Labour Supply of Single Mothers," IZA Discussion Papers 7706, Institute for the Study of Labor (IZA).
  3. Craig Brett & Laurence Jacquet, 2011. "Workforce or Workfare?," CESifo Working Paper Series 3463, CESifo Group Munich.
  4. Alexander M. Gelber, 2010. "Taxes and Time Allocation: Evidence from Single Women," 2010 Meeting Papers 1031, Society for Economic Dynamics.
  5. Jesse Rothstein, 2009. "Is the EITC Equivalent to an NIT? Conditional Cash Transfers and Tax Incidence," NBER Working Papers 14966, National Bureau of Economic Research, Inc.
  6. Stefanie Behncke & Markus Frölich & Michael Lechner, 2007. "Targeting Labour Market Programmes - Results from a Randomized Experiment," University of St. Gallen Department of Economics working paper series 2007 2007-37, Department of Economics, University of St. Gallen.
  7. John Hatfield & Fuhito Kojima & Yusuke Narita, 2012. "Promoting School Competition Through School Choice: A Market Design Approach," Discussion Papers 12-019, Stanford Institute for Economic Policy Research.
  8. Tomer Blumkin & Yoram Margalioth & Efraim Sadka, 2013. "The desirability of workfare in the presence of misreporting," International Tax and Public Finance, Springer, vol. 20(1), pages 71-88, February.

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