If worker performance is observable and contractible without cost, then why do we observe "Spencian", unproductive, education? We provide the following explanation. Say that the economy consists of several different sectors, and that agents are uncertain which of these sectors they are best fit...

We evaluate the costs of three different programs for alleviating long term poverty: (i) workfare, or grants made contingent on a work requirement, (ii) universal welfare, or unconditional grants, and (iii) meanstested welfare, or grants conditioned on private labor market earnings. We identify...