Is Reduced Work Effort Really So Bad

In most studies, the sensitivity of work effort to incentives is much greater for secondary workers—married women and children— than for men and is relatively low for men (Deaton and Muellbauer 1980). The reduction of work effort by secondary workers can be a tolerable, sometimes even a valuable, outcome. 

A reduction In child labor Is normally viewed as a desirable outcome, not a problem, especially if less work Is associated with children being able to devote more attention to their schooling. This has been the outcome of CCTs for which the condition is related to schooling, which have reduced work effort by children and youth, but not by adults, in recipient families. 

A fourth option is to set benefits at levels lower than adults can earn by working. Most programs in developing countries have extremely low benefits, often only a small fraction of the poverty line. Thus they inherently leave plenty of incentive to work. The low benefits are usually due more to fiscal constraints than concerns about work disincentives, but the result is the same. In countries with a full suite of social protection programs, this rule will translate into lower social assistance payments than unemployment insurance or the minimum pension provided by the contributory pension system. 

FOR PROTECnON AND PROMOTION THE DESIGN AND IMPLEMENTATION OF EFFECTIVE SAFETY NETS 

In thinking about benefit levels and possible reductions in work effort, the value of any noncash benefits must be taken into account. In a number of countries (for example, China, Jamaica, and Romania), recipients of needs-based social assistance also receive subsidized or free health insurance or waivers of user fees for health care. These may add substantially to the value of assistance, and thus to the possible incentive to reduce work effort or income in order to qualify for assistance. 

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