welfare trap

Benefits discourage employment

A welfare trap is a situation where receiving government benefits discourages work because earning income would reduce or eliminate those benefits, leaving the person no better off financially.

The term is used critically to describe how means-tested programs can create perverse incentives: She turned down the promotion because it would push her into the welfare trap.

Also called a poverty trap or benefits trap.

Related

public assistance · means testing · unemployment · income thresholds · entitlements · marginal tax rate · cliff · precarity · dependency · breaking free · food stamps · subsidies · social security · stuck · generational · struggling · working poor · making ends meet

Opposites
economic mobility and incentive structure

welfare trapeconomic ladder

Wealth-based class hierarchy

upward mobility · social mobility · self-sufficiency · economic independence · career pathway

policy design philosophy

welfare trapsafety net

Protection against failure

social safety net · hand up · workfare · universal basic income

social safety net function

welfare trapsafety net

Protection against failure

social safety net · temporary assistance · cushion · soft landing

Family

well, trap, fare, welfare, farewell, well-being, trapping, entrapment, welfarism

Familiarity
Top 500,000
Profile
Timeless · Abstract · Negative · Rated PG