Articles
Income Assistance and Aggregate Disposable Income
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AuthorIlloong Kwon (Seoul National University)
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Year2024
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VolumeVol.40
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NumberNo.1
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This paper provides a simple theoretical model to analyze how income assistance affects the aggregate disposable income of recipients when a government cannot observe the recipients’ earning capabilities. If the recipients’ earning capabilities are uniformly distributed, means-tested linear income assistance benefits do not affect their aggregate disposable income, regardless of the size or reduction rates of the distributed benefits. Under a realistic distribution of earning capabilities, their aggregate disposable income can even decrease.
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