Definitely agree, and that is part of my point. Under many welfare states, you're worse off (utility and something monetary-wise) after you try to enter the lab

Definitely agree, and that is part of my point. Under many welfare states, you're worse off (utility and something monetary-wise) after you try to enter the labor market, since you're suddenly working 40 hours a week for almost the same amount of money you got for working 0 hours a week.