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Choosing to become a 'lost cause': the perverse effects of benefit preconditions

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  • Lisa Farrell
  • Paul Frijters

Abstract

This paper argues that preconditions for welfare benefit entitlements based on labour market prospects can be counterproductive when they create an incentive for individuals to abstain from any investment earlier in life that could improve future prospects. Benefit entitlements based partly on investments made prior to labour market entry are then Pareto-improving. Copyright 2008 , Oxford University Press.

Suggested Citation

  • Lisa Farrell & Paul Frijters, 2008. "Choosing to become a 'lost cause': the perverse effects of benefit preconditions," Oxford Economic Papers, Oxford University Press, vol. 60(1), pages 1-19, January.
  • Handle: RePEc:oup:oxecpp:v:60:y:2008:i:1:p:1-19
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    File URL: http://hdl.handle.net/10.1093/oep/gpm017
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    Cited by:

    1. Paul Frijters & Robert Gregory, 2006. "From Golden Age to Golden Age: Australia's 'Great Leap Forward'?," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 207-224, June.

    More about this item

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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