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The effect of welfare reform and technological change on unemployment

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  • Jason L. Saving

Abstract

Unemployment has fallen to its lowest level in a generation. Some welcome this development because they believe it increases the average person's ability to achieve the American dream. Others view low unemployment as a precursor to dire economic consequences. Jason Saving examines the issue of unemployment and reaches three main conclusions. First, welfare reform can significantly reduce unemployment, and the empirical evidence to date suggests the recent American welfare reform effort has caused hundreds of thousands of Americans to leave the welfare rolls and enter the labor force. Second, welfare reform can increase the official unemployment rate, but it cannot increase the number of people who are out of work. Finally, technological change can help low-skilled or disabled individuals become productive members of the labor force, and there is reason to believe it has done so during the 1990s.

Suggested Citation

  • Jason L. Saving, 2000. "The effect of welfare reform and technological change on unemployment," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q2, pages 26-34.
    • Handle: RePEc:fip:fedder:y:2000:i:q2:p:26-34
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    References listed on IDEAS

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    1. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
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    5. Jason L. Saving, 1998. "Is unemployment too low? How welfare reform and technology are creating a new employment standard," Southwest Economy, Federal Reserve Bank of Dallas, issue Nov, pages 5-8.
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    Cited by:

    1. Bharat Trehan, 2001. "Unemployment and productivity," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct12.

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