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Choosing To Become A ‘Lost Cause’:The Perverse Effects Of Benefit Preconditions

Author

Listed:
  • Lisa Farrell
  • Paul Frijters
Abstract
This paper argues that preconditions for welfare benefit entitlements based on labour market prospects can be counterproductive when they create an incentive for individuals to abstain from any investment earlier in life that could improve future prospects. Benefit entitlements based partly on investments made prior to labour market entry are then Pareto-improving.

Suggested Citation

  • Lisa Farrell & Paul Frijters, 2003. "Choosing To Become A ‘Lost Cause’:The Perverse Effects Of Benefit Preconditions," Department of Economics - Working Papers Series 886, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:886
    as

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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-03/886.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Paul Frijters & Robert Gregory, 2006. "From Golden Age to Golden Age: Australia's ‘Great Leap Forward’?," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 207-224, June.

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    More about this item

    Keywords

    Benefits; job search; irreversible investments;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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