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Work Requirements and Long Term Poverty

Fred Schroyen, Gaute Torsvik

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Abstract

We study how work requirements can be used to target transfers to\nthe long term poor. Without commitment, time consistency requires all\nscreening measures to be concentrated in the first phase of the program.\nWe show that this increases the effectiveness of workfare; it is optimal to\nuse work requirements for a wider range of prior beliefs about the size\nof the poor population, and work requirements are used more intensively.\nWe compare these results with the optimal policy under commitment.

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We study how work requirements can be used to target transfers to\nthe long term poor. Without commitment, time consistency requires all\nscreening measures to be concentrated in the first phase of the program.\nWe show that this increases the effectiveness of workfare; it is optimal to\nuse work requirements for a wider range of prior beliefs about the size\nof the poor population, and work requirements are used more intensively.\nWe compare these results with the optimal policy under commitment.

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Available abstract

We study how work requirements can be used to target transfers to\nthe long term poor. Without commitment, time consistency requires all\nscreening measures to be concentrated in the first phase of the program.\nWe show that this increases the effectiveness of workfare; it is optimal to\nuse work requirements for a wider range of prior beliefs about the size\nof the poor population, and work requirements are used more intensively.\nWe compare these results with the optimal policy under commitment.

Key concepts: Poverty, Workfare, Earnings, Welfare, Term (time), Economics, Work (physics), Spurious relationship

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