“Means-tested benefits are designed to support basic needs such as food, health insurance, and child care for households with low incomes. When considering whether to take a new job opportunity that will increase their income, recipients of these benefits may be forced to consider trade-offs…
“As a result of this risk and uncertainty, workers with low incomes might be reluctant to take higher-paying jobs that push their income above the eligibility thresholds for their benefits. This can be particularly important if the recipient views the job opportunity as unstable and likely to end unexpectedly, thereby putting them in a position where they need benefits again. This project carried out a discrete choice experiment to better understand how people who receive federal benefits weigh the potential risks and tradeoffs of additional earnings.”
This research sheds light on how the structure of government-provided benefits affects recipients’ incentives to pursue paid employment and wage increases — issues which arise as Congress considers expanding the child tax credit to more low-wage families.