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The Welfare versus Work Paradox

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  • Roberto Iacono

Abstract

How can countries balance work incentives and access to welfare without violating the principle that work shall always be strictly preferred to welfare? In a context in which wages stagnate or drop, and benefit levels are reduced due to austerity measures, the welfare versus work paradox arises. This research shows analytically that when both wages and benefits approach the subsistence level, welfare becomes preferable to work, violating the work incentive principle. The policy implication of this result is that, to maintain the validity of the work incentive principle, minimum wages must be kept above the subsistence threshold.

Suggested Citation

  • Roberto Iacono, 2025. "The Welfare versus Work Paradox," PLOS ONE, Public Library of Science, vol. 20(5), pages 1-6, May.
    • Handle: RePEc:plo:pone00:0321564
    DOI: 10.1371/journal.pone.0321564
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    References listed on IDEAS

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    1. Roberto Iacono, 2019. "The Norwegian Oil Bonanza and the Scandinavian Model in Comparative Perspective," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 63-82, March.
    2. Luca Giangregorio & Marta Fana, 2024. "What’s behind increasing wage inequality? Explaining the Italian case using RIF-OLS," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 41(1), pages 229-265, April.
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