Volume 3, Number 3 (Summer) 1968
Leuthold, Jane H. 1968. "An Empirical Study of Formula Income Transfers and the Work Decision of the Poor." Journal of Human Resources 3(3):312-323.
The problem of estimating the changes in work effort which might be expected from the introduction of one of the new programs of income maintenance is the focus of this article. Utilizing information on work behavior contained in a cross-section sample of low-income workers and assuming that worker preferences are structured in a particular manner, one can draw conclusions regarding possible changes in work effort and income. A finding of the study is that a worker's behavior in response to the introduction of a formula transfer program depends critically on his response to changes in property income and the wage rate. The results indicate that little changes in work effort may be expected on the part of the population as a whole from the introduction of a low rate formula plan.
The author is Assistant Professor of Economics at the University of Illinois. The research reported here was supported in part by funds granted to the Institute for Research on Poverty at the University of Wisconsin by the Office of Economic Opportunity pursuant to the provisions of the Economic Opportunity Act of 1964. The author is grateful to a number of persons, especially Martin H. David, Harold W. Watts, and Arthur S. Goldberger, for their helpful comments.
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