Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 8/2011: Workforce or Workfare?

Craig Brett () and Laurence Jacquet ()
Additional contact information
Craig Brett: Mount Allison University, Postal: Department of Economics,, Mount Allison University,, 144 Main Street, Sackville NB, E4L 1A7, Canada
Laurence Jacquet: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: This article explores the use of workfare as part of an optimal tax mix when labor supply responses are along the extensive margin. Particular attention is paid to the interaction between workfare and an earned income tax credit, two policies that are designed to provide additional incentives for individuals to enter the labor force. This article shows that, despite their common goal, these policies are often at odds with each other.

Keywords: Extensive margin; optimal income taxation; workfare

JEL-codes: H21

18 pages, April 13, 2011

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