Work incentives in low-income families

Name

Institution

Instructor

Course code

Work Incentives in low-Income Families

Work incentives are part government efforts in ensuring more labor participation in the economy especially by the low income families Basically , aim of work incentives (income transfer systems ) in U .K and U .S .A for low-income is to reduce poverty and welfare dependency as well as encourage work . U .S .A and U .K have had in work benefits for more than two decades (Brewer

1 . The effectiveness of these transfers systems depends on various factors . Workers

will compare their income out of work with the income they are likely to receive if they were employed As rational economic agents , they will opt not to take jobs whose pay is below the income when out of work . Workers are also sensitive to leisure and work hours trade off . Where utility derived from leisure is high than income expected at work , then as rational being , a worker will opt not to be employed . The withdrawal rates of these incentives also have affects their effectiveness (Brewer p5 Blundell 2000

Work incentives to low income families in U .K and U .S .A have been in form of direct financial support and other means to ensure low income families earns more . This has been through tax and benefit system . This incentives aim at encouraging low income workers to be at work at all and also to progress in work . In U .S .A , welfare benefits for low income families are Earned...