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This paper shows how the extension of income to account for unpaid work could highlight the potential discouraging labour supply effect of workfare policies, with an application to a welfare policy currently in an experimental phase in Italy (minimum insertion income, MI). MI aims at combining the provision of a minimum income to very poor families with policies encouraging labour market participation by at least one of its members (by obliging them to follow training courses or to accept job offers). Women who are likely to be exposed to this discouraging effect have a low level of education and belong to poor households. This analysis also shows how low income households’ welfare is sustained by women’s high unpaid work load. Public policy suggestions: When one extends income to include unpaid work it is possible to perceive how the effect of an active policy against social exclusion like MI can be appreciably reduced with respect to women and to a group of women who are more likely to be excluded (those living in the poorest households and having a low level of education). If this discouraging effect is to be avoided, care must be taken in the provision of MI to the weakest members within the family. The choice of exiting the labour market if poor and with a low level of education, when one has a child aged less than 3, may otherwise become irreversible. An extension of public service provision at low costs for low income families and more information about the long run effects of exiting from the labour market may reduce the discouraging effect. This study deals with very low income families. However the problem of making a choice about labour market participation and the role of the welfare state in affecting it, is also a problem arising for medium income families whenever there are young children or elderly persons needing care in the family, and when at least one of the parents is a non-dependent worker, these families are more often likely to be excluded from public services or included at high tariffs. We would like to thank the research group on unpaid work and standard of living directed by Professor Antonella Picchio for useful comments on a previous version of this paper. The usual disclaimers apply. Financial support from CNEL is gratefully acknowledged.

The gender impact of workfare policies in Italy and the effect of unpaid work