The federal government has implemented an earned income tax credit – what it has called the Working Income Tax Benefit – in the 2007 Budget. Edmund Phelps has argued that the earned income tax credit in the United States should be replaced with an employment subsidy. This paper assesses the importance of Phelps’ concern, and related issues, for Canada. This debate is important for two reasons: the plight of those blocked by the "welfare wall" is dire, and the entire community has an interest in lower structural unemployment in an environment that involves an aging population and an accompanying labour shortage.
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Find related papers by JEL classification: I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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