Do social welfare programs generally reduce the incentive to work?
Per Lawrence Summers, former chief economist of the Obama administration, president emeritus of Harvard University, and former Treasury secretary to President Clinton, "government assistance programs" provide "an incentive, and the means, not to work." Likewise, the Congressional Budget Office has detailed how the provisions of Obamacare "create an incentive for some people to work less" by (1) providing benefits that decline with rising income "thus making work less attractive"; (2) allowing "some people to maintain the same standard of living while working less"; and (3) increasing taxes, which "will ultimately induce some workers to supply less labor." Also, numerous studies have shown that people receiving unemployment benefits are far more likely to begin working as soon as their unemployment benefits run out. This occurs even in "deeply depressed labor markets."
DocumentationLawrence SummersCongressional Budget OfficeUnemployment Benefits