Welfare Work Requirements with Paternalistic Government Preferences

Robert Moffitt

No 12366, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Work requirements in means-tested transfer programs have grown in importance in the U.S. 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 maximized. Here we consider a case where society is paternalistic and instead has preferences over the actual work allocations of welfare recipients. With this social welfare function, optimality of work requirements is possible but depends on the accuracy of the screening mechanism which assigns work requirements to some benefit recipients and not others. Numerical simulations show that the accuracy must be high for such optimality to occur. The simulations also show that earnings subsidies can be justified with the type of social welfare function used here.

JEL-codes: H21 I38 (search for similar items in EconPapers)
Date: 2006-07
New Economics Papers: this item is included in nep-pbe
Note: LS PE
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Citations: View citations in EconPapers (34)

Published as Robert Moffitt, 2006. "Welfare work Requirements with Paternalistic Government Preferences," Economic Journal, Royal Economic Society, vol. 116(515), pages F441-F458, November.

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