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

  • Lisa Farrell
  • Paul Frijters

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.

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File URL: http://hdl.handle.net/10.1093/oep/gpm017
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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 60 (2008)
Issue (Month): 1 (January)
Pages: 1-19

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Handle: RePEc:oup:oxecpp:v:60:y:2008:i:1:p:1-19
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  10. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
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  12. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
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