Complex sentence: A welfare trap is an example of the perverse incentive: the welfare recipient has an incentive to avoid raising his own productivity because the resulting income gain is not enough to compensate for the (increased) work effort.
Split into simpler sentences: A welfare trap is an example of the perverse incentive. The welfare recipient, such as the one above, has an incentive to avoid raising productivity because the resulting income gain is not enough to compensate for the increased work effort.