[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cfe/wpcefa/2013_08.html
   My bibliography  Save this paper

Combating fraud in Poverty-Alleviation Programs - should we use monitoring, workfare or both?

Author

Listed:
  • Cesaltina Maria Pacheco Pires

    (University of Évora, Department of Economics and CEFAGE)

Abstract
This paper presents a static model of adverse selection where the government (principal) aims to minimize the cost of a Poverty Alleviation Program (PAP) ensuring that all agents have access to a minimum level of income. In a two-type-agent model (Rich and Poor) in which agents differ either on their income generating ability or in their disutility of labour, we study the effectiveness of workfare and monitoring as tools to prevent fraud in PAP. When only income generating ability is unknown, we show that the optimal PAP depends on the fraction of Rich agents, the costs of monitoring and the productivity gap between the two types. Thus, the optimal solution might use (a) only workfare; (b) only monitoring; (c) a combination of both; or (d) none of the instruments. When agents differ only in disutility of labour, the optimal PAP does not include workfare. It is shown that the greater the fraction of Rich Type agents and the higher the income differential, the more likely is that the optimal solution includes monitoring.

Suggested Citation

  • Cesaltina Maria Pacheco Pires, 2013. "Combating fraud in Poverty-Alleviation Programs - should we use monitoring, workfare or both?," CEFAGE-UE Working Papers 2013_08, University of Evora, CEFAGE-UE (Portugal).
    • Handle: RePEc:cfe:wpcefa:2013_08
    as

    Download full text from publisher

    File URL: https://api.cefage.uevora.pt/assets/125d2133-2060-4f9c-b3b7-334ef6d05fa7
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Katherine Cuff, 2000. "Optimality of workfare with heterogeneous preferences," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 149-174, February.
    2. Timothy Besley & Stephen Coate, 1995. "The Design of Income Maintenance Programmes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(2), pages 187-221.
    3. repec:bla:jecsur:v:11:y:1997:i:3:p:267-95 is not listed on IDEAS
    4. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-261, March.
    5. Claus Thustrup Hansen & Torben Tranæs, 1999. "Optimal Workfare in Unemployment Insurance," Discussion Papers 99-06, University of Copenhagen. Department of Economics.
    6. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
    7. Nuno Garoupa, 1997. "The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Wiley Blackwell, vol. 11(3), pages 267-295, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Fredriksson & Bertil Holmlund, 2006. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 357-386, July.
    2. Henrik Jordahl & Luca Micheletto, 2005. "Optimal Utilitarian Taxation and Horizontal Equity," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(4), pages 681-708, October.
    3. Robert Moffitt, 2006. "Welfare work Requirements with Paternalistic Government Preferences," Economic Journal, Royal Economic Society, vol. 116(515), pages 441-458, November.
    4. Craig Brett & Laurence Jacquet, 2015. "Workforce or workfare? The optimal use of work requirements when labour is supplied along the extensive margin," Canadian Journal of Economics, Canadian Economics Association, vol. 48(5), pages 1855-1882, December.
    5. Claus T. Hansen & Torben Tranaes, 2000. "Optimal Workfare in a Society of Workers and Non-Workers," Econometric Society World Congress 2000 Contributed Papers 0758, Econometric Society.
    6. Craig Brett & Laurence Jacquet, 2011. "Workforce or Workfare?," CESifo Working Paper Series 3463, CESifo.
    7. Timothy F. Harris, 2018. "Do SNAP Work Requirements Work?," Upjohn Working Papers 19-297, W.E. Upjohn Institute for Employment Research.
    8. Volker Meier, 2008. "Workfare in an efficiency wage model," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(2), pages 165-178, April.
    9. Timothy F. Harris, 2021. "Do Snap Work Requirements Work?," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 72-94, January.
    10. Robert A. Moffitt, 2003. "The Negative Income Tax and the Evolution of U.S. Welfare Policy," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 119-140, Summer.
    11. Bagala Biswal & Raghbendra Jha & Urvashi D. Biswal, 2001. "An Empirical Analysis Of The Impact Of Public Expenditures On Education And Health On Poverty In Indian States," Working Paper 998, Economics Department, Queen's University.
    12. Drenik, Andres & Perez-Truglia, Ricardo, 2018. "Sympathy for the diligent and the demand for workfare," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 77-102.
    13. Torben M. Andersen & Michael Svarer, 2014. "The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market," Economica, London School of Economics and Political Science, vol. 81(321), pages 86-116, January.
    14. Oliveira, Márcia & Côrte-Real, Paulo, 2006. "Poverty Alleviation Programs: Monitoring vs. Workfare," MPRA Paper 913, University Library of Munich, Germany.
    15. Andersen, Torben M., 2012. "Migration, Redistribution and the Universal Welfare Model," IZA Discussion Papers 6665, Institute of Labor Economics (IZA).
    16. Holzner, Christian & Meier, Volker & Werding, Martin, 2010. "Workfare, monitoring, and efficiency wages," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 157-168, March.
    17. Greg Leblanc, 2004. "Optimal Income Maintenance and the “Unemployable”," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(3), pages 509-537, August.
    18. Henrik Jacobsen Kleven & Wojciech Kopczuk, 2011. "Transfer Program Complexity and the Take-Up of Social Benefits," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 54-90, February.
    19. Yui Nakamura, 2015. "A Cost‐Effective Workfare System Succeeding in Attracting Applicants to Labor Markets," Poverty & Public Policy, John Wiley & Sons, vol. 7(3), pages 240-252, September.
    20. Tomer Blumkin & Yoram Margalioth & Efraim Sadka, 2013. "The desirability of workfare in the presence of misreporting," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 71-88, February.

    More about this item

    Keywords

    Poverty alleviation programs; Workfare; Monitoring; Fraud; Adverse selection.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cfe:wpcefa:2013_08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Angela Pacheco (email available below). General contact details of provider: https://edirc.repec.org/data/cfevopt.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.