International Tax and Public Finance

, Volume 20, Issue 1, pp 71–88 | Cite as

The desirability of workfare in the presence of misreporting



In this paper we demonstrate that in addition to its acknowledged screening role, workfare—namely, introducing work (or training) requirements for welfare eligibility in means-tested programs—also serves to mitigate income misreporting by welfare claimants. It achieves this goal by effectively increasing the marginal cost of earning extra income in the shadow economy for claimants who satisfy the work requirement. We show that when misreporting is sufficiently prevalent, supplementing a means-tested transfer system with work requirements is socially desirable.


Workfare Welfare Means-testing Misreporting Utility maintenance 

JEL Classification

D6 H2 H5 



The authors wish to thank two anonymous referees for helpful comment and constructive suggestions. The usual disclaimer applies.


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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  • Tomer Blumkin
    • 1
    • 4
    • 5
  • Yoram Margalioth
    • 2
  • Efraim Sadka
    • 3
    • 4
    • 5
  1. 1.Department of EconomicsBen-Gurion UniversityBeer-ShebaIsrael
  2. 2.The Buchman Faculty of LawTel-Aviv UniversityTel-AvivIsrael
  3. 3.The Eitan Berglas School of EconomicsTel Aviv UniversityTel-AvivIsrael
  4. 4.CesIfo, University of MunichMunichGermany
  5. 5.IZABonnGermany

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