CHOOSING TO BECOME A ‘LOST CAUSE’:THE PERVERSE EFFECTS OF BENEFIT PRECONDITIONS

Lisa Farrell () and Paul Frijters

No 886, Department of Economics - Working Papers Series from The University of Melbourne

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.

Keywords: Benefits; job search; irreversible investments (search for similar items in EconPapers)
JEL-codes: J20 J60 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2003
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Choosing to become a 'lost cause': the perverse effects of benefit preconditions (2008)
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