The Welfare Effects of Welfare and Tax Reform during the Great Recession

This study sought to investigate if the current practice of offering assistance to low income families through tax credits and other transfer methods which are conditional on the recipient working, have financially hurt these families when the labor market is particularly bad, as during the Great Recession. The authors found that work incentives are not helpful to low-income individuals during times when unemployment is high. It is suggested that work incentive policies should be better tied to the ups and downs in the labor market.