Welfare work Requirements with Paternalistic Government Preferences
Work requirements in means-tested transfer programmes have grown in importance in the US 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 maximised. Here we consider a case where society instead has preferences over the actual work allocations of welfare recipients. Optimality of work requirements is shown to be possible but depends on the accuracy of the screening mechanism which assigns work requirements. Numerical simulations show that accuracy must be high for optimality. Earnings subsidies may also be optimal. Copyright 2006 The Author(s). Journal compilation Royal Economic Society 2006.
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Volume (Year): 116 (2006)
Issue (Month): 515 (November)
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