Welfare recipients are sometimes faced with a withdrawal of welfare benefits and an increase in income tax as their earned income rises.This creates a problem because
A)firms become unwilling to hire people that are currently unemployed.
B)of the powerful disincentives to work for low-income individuals.
C)of the incentives for workers to shirk and/or retire early.
D)of the incentives for firms to lay off workers more frequently for short periods.
E)it is administratively difficult to track these individuals.

Question

Quizplus · Accepted Answer

Welfare recipients may be discouraged from working as they could lose their benefits and face increased income taxes, which creates disincentives to work for low-income individuals. This may lead to a reduction in labor force participation and an increase in poverty rates.

Welfare Recipients Are Sometimes Faced with a Withdrawal of Welfare