Abstract
A welfare programme can contribute to preventing suicide by granting cash benefits to those experiencing considerable deterioration in their living standards. However, undesirable side effects may arise. Cash benefit beneficiaries might depend heavily on welfare, thus finding themselves caught in an unemployment trap in which they have little incentive to seek work. This problem should be considered when developing a welfare programme aimed at poverty relief. This paper assumes two welfare programmes as polar cases. One programme provides all beneficiaries with the same amount of cash benefits. The other provides each beneficiary with an amount that is proportional to the level of his or her previously earned wage income. This paper assumes that these welfare programmes prohibit beneficiaries from earning extra income and carrying cash benefits over to the next period. I numerically simulate suicidal decision making under each programme. The simulation results show that flat-rate cash benefits can contribute more to suicide prevention than wage-related cash benefits.
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Notes
In this paper, the definition of the unemployment trap follows the definition in Chapter 6 of Barr (2012).
See also Kaufmann (2013) for differences in the welfare system between the United States and European countries.
Indivisible labour means that agents must work full time or not at all. This assumption may be justified by the fact that not many can choose at their will how many hours to work in a certain period. See Hansen (1985) for the labour indivisibility assumed in the macroeconomic literature.
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This research is supported by Grant-in-Aid for Scientific Research from the Japan Society for the Promotion of Science (JSPS). The Grant Number is (C) 23530345. The author would like to thank Enago (http://www.enago.com) for the English language review.
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Suzuki, T. Cash benefits for poverty relief from the viewpoint of suicide prevention. Eurasian Econ Rev 6, 489–498 (2016). https://doi.org/10.1007/s40822-016-0052-y
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DOI: https://doi.org/10.1007/s40822-016-0052-y