Search and Work in Optimal Welfare Programs

Actual welfare programs often feature work requirements in exchange for benefits and job-search assistance. We study the optimal design of welfare programs for the unemployed when the principal/ government can solicit either job-search effort or work effort from the agent or, alternatively, can relieve the agent from supplying effort and search on her behalf. Our main result is that when the generosity of the welfare program (i.e., its initial promised utility) is low, then the optimal program should be based on work activities. In contrast, when the initial generosity, or available budget, is high the optimal program should be based on search —and search assistance— activities.


Issue Date:
2010
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/275749
Language:
English
Total Pages:
27
JEL Codes:
D82; H21; J24; J46; J65




 Record created 2018-08-09, last modified 2020-10-28

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