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Workfare versus Welfare: Incentives Arguments For Work Requirement In Poverty-Alleviation Program

NewsID:316    Datetime:2011-03-14

 

Many would agree with Samuel Johnson that "a decent provision for the poor is a true test of civilization." Yet still there is much debate about what form poverty relief should take. Particularly controversial be required to safety boots in exchange for benefits.
The use of work requirements in poverty-alleviation programs is of widespread significance. Perhaps the most notorious historical examples is the English system, instituted by the Poor Law of 1834, in which poor relief was granted through residence in a workhouse. Workfare was also common in ancient regime France, where relief was translated in "charity workshops". But workfare schemes are by on means just relics from the past. They remain popular in both developed and less developed countries today. In the United States, for example, number of states now demand that welfare claimants enroll in either a training or work program in order to receive benefits. Similarly, current practice in India relies heavily on public-works projects as a tool for providing poor relief.
 
There are many arguments made in favor of work requirements in poverty-alleviation programs. One consistent theme, however, is that work requirements serve to provide the "appropriate incentives", for recipients of poor relief. Thus, this paper provides a detailed exploration of the incentive case for workfare. We analyze two distinct incentive arguments: a screening argument that work requirements may serve as a means of targeting transfers and deterrent argument that they may serve as a device to encourage poverty-reducing investments. Familiar notions from the economics of incentives. Familiar notions from the economics of incentives are shown to provide insights into modern-day social policy and historical debates.
The screening argument is motivated by a desire to direct poor support toward the truly needy. In developing economies, it is typically too costly for the government to set up a sophisticated administrative machinery to determine whether a particular individual is in need of poor support. Even information about individuals' incomes and safety shoes  is unlikely to be available in this way. In such situations, it may be better to make the relief system self-targeting by laying down conditions for claiming support such that only the truly needy present themselves. A work requirement is one such test. As Jean makes clear, this logic lay behind British administrators' reliance on public works to relieve famines in colonial India. Moreover, as confirmed, it was also a common theme in early arguments for work requirements in the United States.

There may even be a screening role for safety boots requirements in developed countries, where the administrative infrastructure makes it easier to assess the circumstances.

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