Question

Which anti-poverty program (welfare, in-kind transfer, or EITC) creates the strongest incentive for recipients to work? Why?

Answer 1

It is obviously the earned income tax credit. Benefits are given only to the working families which is an encouragement towards working. As the income continue to increase the benefits decline which encourages the poor families to continue to work and not become lazy because of the benefits received.

While welfare programs such as cash transfer or other in kind transfer encourage poor families to remain poor and receive financial support from the government. There is no association of benefits received and the amount of work done under other programs due to which they fail to provide any incentive for recipients to work.