Fiscal policy in the U.S. and other countries renders intertemporal budgets non-differentiable, nonconvex, and discontinuous. Consequently, assessing work and saving responses to policy requires global optimization. This paper develops the Global Life-Cycle Optimizer (GLO), a stochastic...

Personal taxes and benefits affect the incentive to work over the lifecycle by altering income-age profiles, insuring against adverse shocks, and changing the returns to human capital. Previous work investigating the impact of taxes and benefits on work incentives has tended to ignore these...

This paper studies a transmission mechanism through which pro-vulnerable income transfers may affect individual decision-making of non-beneficiaries in an extreme poverty context, leading to labor supply contraction and the so-called dependency syndrome. The argument is based on the...

Social assistance in Germany reduces the incentive to work. The U.S. Welfare to Work Programm tries to avoid such distinctives. It consists essentially of two elements: the Earned Income Tax Credit (EITC) for employees in low wage occupations and a workfare model. The EITC and the Workfare model...