Question

Government may give another policy like a cash grant combined with a labor income rate, which is the second policy we talked about in class. Explain why this policy is better than giving a cash grant to unemployed people.

Answer 1

Unemployment is a major problem in almost all country, the government of every country try to provide employment to its citizens but even then there is large scale unemployment in all country.

Now to help the unemployed people so that they can live a normal life and do not starv the government of every country tries its best. They try to help them in ways like -

• Provide a cash grant to unemployed people
• Provide a labor income
• Or a combination or some other

But out of these, to provide a labor income is considered a better option as if government provide unemployed people cash grant then these unemployed people's willingness to work will decrease i.e. they will not like to work as they are getting free money and also it will be a loss/burden to government as this cash grant is a non economic payment.

But if government provide them labour income then there will be some contribution of these people in the GDP and finally development of the country and they will also work hard to earn more money and improve their standard of living which will finally be beneficial for the country.