What is the welfare cliff?
The theory of the welfare cliff is built on the belief that, if welfare recipients move into work and earn more money, they reach a certain point—the edge of eligibility—where they “fall off a cliff,” lose their welfare benefits, and are left worse off. The theory largely assumes that welfare enrollees are working, earning right up to the edge of eligibility, and hovering at that point to avoid falling off the benefit cliff. According to the theory, enrollees will avoid higher income in order to keep their welfare.
While the welfare cliff theory is not entirely without merit, it is largely based on three myths: that welfare enrollees are near the cliff and reduce or limit their work in order to keep their benefits, that going over the cliff leaves enrollees worse off, and that enrollees are thrown off the ledge without a parachute.
