Question of the Day

Welfare & Work

Do social welfare programs generally reduce the incentive to work?

Correct Answer

Tell Me More

Per Lawrence Summers, Obama's chief economist and Clinton's Treasury Secretary, "government assistance programs" provide "an incentive, and the means, not to work." Likewise, the Congressional Budget Office has detailed how the provisions of Obamacare "create an incentive for some people to work less" by (1) providing benefits that decline with rising income "thus making work less attractive"; (2) allowing "some people to maintain the same standard of living while working less"; and (3) increasing taxes, which "will ultimately induce some workers to supply less labor." Also, numerous studies have shown that people receiving unemployment benefits are far more likely to begin working as soon as their benefits run out. This occurs even in "deeply depressed labor markets." Most tellingly, a large randomized controlled trial of "guaranteed income" recently found that giving poor families an extra $12,000/year caused "fairly substantial" declines in their work hours and income from work.




Reload Question
Reload Question
Share via Facebook
Share via Twitter
Share via Email
Embed into your website
About the Fact App
Articles by Topic