Public welfare-to-work programs provide a boost for low-skilled workers to impro
The primary aim of in-work welfare programs is to provide incentives for people without work to move into employment. In 2003, the UK government spent around £13 billion on such programs. In a paper just published in Fiscal Studies, Dr. Reamonn Lydon of Frontier (London) and Professor Ian Walker (University of Warwick) show that as well as taking into account the employment effects of such programs, evaluators should also pay close attention to the effect on the incentives for the taking up training within the firm. The paper shows that the tax credit programs can, for some individuals, provide significant positive net incentives for training on the job. This is in contrast to the oft-cited criticism of such programs that they tend to subsidise bad employers providing 'dead-end' jobs.
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