Subsidized public programs increase or reduce recipients' incentive to work depending on socio-economic status of the recipients. Subsidized public programs consider several variables such as income, family size, consumption, and accessibility to basic needs to determine poverty threshold level. These programs provide social stability and safety nets to needy people such as disabled, aged, and single parents families (Hyman, 2014). These programs intend to assist the poor to improve their well-being. Subsidized public programs reduce recipient's incentive to work if they are close to poverty threshold level. In that case, additional income may make them ineligible to avail subsidies.
This tendency is more prominent if additional income received from working is lower than the value of subsidy lost. But, such programs increase recipients' incentive to work if their additional income earned from working does not make them ineligible to avail benefits of subsidized government programs. Poor people need subsidies to escape destitution and improve their well-being.
But, subsidized public programs reduce incentives to work if policies make welfare packages more attractive than a low-paying job. That is why government policies are trying to limit how long a person can receive welfare benefits, and incorporate strict work requirements (Berlin, 2000). Many programs also reward work by changing the way earned income is treated. Some programs also require the long-term welfare recipients to work for minimum a certain number of hours.