Welfare Dependence and Self-Control: An Empirical Analysis

• Autores: Marc K. Chan
• Localización: Review of economic studies, ISSN 0034-6527, Vol. 84, Nº 4, 2017, págs. 1379-1423
• Idioma: inglés
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• Resumen

  • A hyperbolic discounting model of labour supply and welfare participation with heterogeneous time preference parameters is estimated. Exclusion restrictions are constructed from variations in behaviour induced by time limits in a welfare reform experiment. We find that most individuals are time-inconsistent, and they exhibit varying degrees of present bias and perception of the commitment problem. Introducing a welfare component to the tax system can make individuals worse off by aggravating the commitment problem. Certain dynamic policy interventions carry sizeable commitment-related work incentives; for instance, a dynamic sanction triggered by past employment can be preferred by some individuals as a commitment device.