Who should be on workfare? the use of work requirements as part of an optimal tax mix

Brett, Craig

doi:10.1093/oep/50.4.607

Cited by 41 publications

(46 citation statements)

References 8 publications

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“…equation (5) subject to the individual labour supply of workers (1), the constraints (2)-(4), the minimum utility requirement of non-workers (6), and the requirement that all variables are non-negative. In this way, we obtain all the Pareto optimal benefit policies parameterized on b.…”

Section: Optimal Benefit Policiesmentioning

confidence: 99%

“…(7) may be in conflict with the labor market participation constraint in (2) and with the minimum transfer level in (6). Note, that the labour market participation constraint implies that the benefit level has to be below some upper boundb.…”

Section: Pecuniary Benefit Systemsmentioning

confidence: 99%

“…See also the discussion in Karni (1999). 6 There is some evidence pointing to this discouragement effect of workfare. Meyer (1995) evaluates a number of UI experiments some of which have an effort requiring element to them and find that this can easily influence the take up rate.…”

Section: Introductionmentioning

confidence: 99%

“…In the latter workfare is used to prevent high productive individuals from claiming poverty relief while in our analysis workfare is used to discourage voluntarily jobless individuals from obtaining unemployment benefits intended for involuntarily unemployed workers. 6 As a consequence, the conditions for workfare to be Pareto optimal 4 In most advanced countries there exist defacto income transfers to jobless individuals who could work but prefer not to. In principle this level (the minimum transfer level) is often zero but in practise it is not.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Optimal Workfare with Voluntary and Involuntary Unemployment*

Kreiner

Tranæs

2005

Scandinavian J Economics

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This paper studies whether a benevolent government should use workfare as part of its unemployment benefit policy. We consider a population composed of employed and unemployed workers as well as individuals who do not seek employment. Job search behavior is private information implying that voluntarily unemployed individuals can claim unemployment insurance (UI) benefits intended for unemployed workers. As a consequence, pecuniary benefit schemes underinsure workers against unemployment. We show that requiring unproductive activities (workfare) in exchange for UI benefits may create a Pareto improvement by facilitating better unemployment insurance for workers, and we characterize the situations where this is the case. (JEL H2, J65)

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Section: Optimal Benefit Policiesmentioning

confidence: 99%

Section: Pecuniary Benefit Systemsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Optimal Workfare with Voluntary and Involuntary Unemployment*

Kreiner

Tranæs

2005

Scandinavian J Economics

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“…5 See also Besley and Coate (1995), Brett (1998), Cuff (2000, and Kanbur, Keen and Tuomola (1994). 6 See also Diamond (1980) who first addressed the extensive margin in a Mirrlees' type model.…”

mentioning

confidence: 99%

Taxes and Employment Subsidies in Optimal Redistribution Programs

Beaudry

Blackorby

Szalay

2009

American Economic Review

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This paper explores how to optimally set tax and transfers when taxation authorities: (1) are uninformed about individuals' value of time in both market and non-market activities and (2) can observe both market-income and time allocated to market employment. We show that optimal redistribution in this environment involves distorting market employment upwards for low wage individuals through decreasing wage-contingent employment subsidies, and distorting employment downwards for high wage individuals through positive and increasing marginal income tax rates. In particular, we show that whether a person is taxed or subsidized depends primarily on his wage, that is, the optimal program involves a cut-off wage whereby workers above the cutoff are taxed as they increase their income, while workers earning a wage below the cutoff receive an income supplement (an earned income tax credit) as they increase their income. Finally, we show that the optimal program transfers zero income to individuals who choose not to work.Journal of Economic Literature Classification Numbers: D82, H21, H 23.

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Cash Transfers for Poverty Alleviation Under Double Asymmetric Information Regarding Income and Productivity

Nakamura

2014

Poverty & Public Policy

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When a government makes cash transfers as a part of a poverty alleviation program, it often faces a screening problem in identifying those individuals who most deserve to be supported financially because individual productivity levels cannot be monitored. Self-selection mechanisms such as inkind transfers have been proven to be able to overcome this screening problem when individual income levels can be observed by the government. However, especially in developing countries, it is also often difficult for the government to observe individual income. In this article, we thus propose a mechanism that enables cash transfers to support deserving individuals, even though individual income levels cannot be monitored. Moreover, the proposed system allows the government to obtain the necessary financial resources by collecting taxation from productive individuals.

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Who should be on workfare? the use of work requirements as part of an optimal tax mix

Cited by 41 publications

References 8 publications

Optimal Workfare with Voluntary and Involuntary Unemployment*

Optimal Workfare with Voluntary and Involuntary Unemployment*

Taxes and Employment Subsidies in Optimal Redistribution Programs

Cash Transfers for Poverty Alleviation Under Double Asymmetric Information Regarding Income and Productivity

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