The desirability of workfare in the presence of misreporting

Tomer Blumkin, Yoram Margalioth, Efraim Sadka

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

In this paper we demonstrate that in addition to its acknowledged screening role, workfare-namely, introducing work (or training) requirements for welfare eligibility in means-tested programs-also serves to mitigate income misreporting by welfare claimants. It achieves this goal by effectively increasing the marginal cost of earning extra income in the shadow economy for claimants who satisfy the work requirement. We show that when misreporting is sufficiently prevalent, supplementing a means-tested transfer system with work requirements is socially desirable.

Original languageEnglish
Pages (from-to)71-88
Number of pages18
JournalInternational Tax and Public Finance
Volume20
Issue number1
DOIs
StatePublished - 1 Feb 2013

Keywords

  • Means-testing
  • Misreporting
  • Utility maintenance
  • Welfare
  • Workfare

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