Optimality of workfare with heterogeneous preferences

Katherine Cuff

Canadian Journal of Economics, 2000, vol. 33, issue 1, 149-174

Abstract: With the standard non-linear income taxation framework with heterogeneity of preferences, in this paper the optimality of workfare as a screening tool is examined. It is assumed that workfare does not serve as a human capital investment, participation is mandatory, and administrative costs are negligible. Imposing alternative cardinalizations on individuals utilities allows for the possibility that the government optimally redistributes income to or from high disutility of labour individuals. Under either case, it is never optimal to impose workfare on these individuals. It is also shown that non-productive workfare can be an efficient policy tool, in contrast to the results found in Besley and Coate (1995), Brett (1998), and Beaudry and Blackorby (1997).

JEL-codes: H21 H23 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (99)

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Working Paper: Optimality Of Workfare With Heterogeneous Preferences (1998)
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