Practice mode Income Inequality

Why do current anti-poverty programmes discourage work?

Correct answer A. Benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once receiving benefits

Explanation

Means-tested support is withdrawn as earnings rise, acting like a high marginal tax on extra work. When the withdrawal rate is steep, an extra hour of work raises net income very little.

Report a problem

Answer checked How we write and check questions

Tip: press A, B, C or D to answer, and N for the next question.

Advertisement

Have a question about this answer?

Your email address will not be published. Required fields are marked *

Links and website addresses are not allowed in comments.