The Korean Journal of Economic Studies
Work Incentive Effects of a Workfare Program
Chul-In Lee(Seoul National University), Chang-Gyun Park(Chung-Ang University)Year 2011Vol. 59No. 3
Abstract

This paper studies the work incentive effects of the so-called Self Relianceprogram (SR), some sort of a training program within the welfare system inKorea [the Minimum Living Standard (MLS) program]. In contrast to theintended program goals, our quasi-experimental approach demonstrates thefollowing: (i) exits from poverty are found to be few, and the programreplaces work opportunities with welfare dependence, (ii) future employmentprobabilities rather fall, and (iii) these problems arise because the negativework incentive effects from the MLS program dominate the positive effectsfrom the SR program. Our results imply that improving the SR programwithout revising the MLS program would not boost exists from welfaredependence and poverty.