Another "Question of the Day" from
Just Facts DailyWelfare & Work
Do social welfare programs generally reduce the incentive to work?
1. Yes
2. No
3. Maybe
Correct Answer 1. Yes
Correct Answer Rate 92%
Discussion:
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.
Documentation:
Lawrence Summers
Congressional Budget Office
Unemployment Benefits
Guaranteed Income RCT
Understanding RCTs
