In-kind transfers, cash grants and labor supply

Research output: Contribution to journalArticlepeer-review

Abstract

In-kind and cash transfer programs are compared in their impacts on labor supply. It is demonstrated that labor supply is higher under an in-kind transfer program, if in-kind transfers and leisure are Hicks substitutes, leisure is normal, and in-kind transfers are 'over-provided'. It is further shown that under these conditions a one dollar increase in in-kind coupled with a one dollar cut in cash transfers increases tax revenues. Finally, the paper proves that weak separability of preferences between leisure and other goods, in addition to normality of leisure and normality and over-provision of in-kind transfers, is also sufficient to ensure a higher level of labor supply under in-kind transfers.

Original languageEnglish (US)
Pages (from-to)495-504
Number of pages10
JournalJournal of Public Economics
Volume55
Issue number3
DOIs
StatePublished - Nov 1994

Keywords

  • Cash grants
  • In-kind transfers
  • Labor supply

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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