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Welfare Dynamics under Time Limits

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Author Info
Jeffrey Grogger
Charles Michalopoulos

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Abstract

Among the most important changes brought about by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 are time limits, which provide consumers with an incentive to conserve their welfare benefits for future use. Among forward-looking, expected-utility-maximizing consumers who face liquidity constraints and earnings uncertainty, economic theory predicts that the incentive to conserve should be strongest among families with the youngest children. We test this prediction using data from Florida's Family Transition Program, a randomized welfare reform experiment. Our estimates generally exhibit the predicted age dependence, which suggests that time limits affect welfare use before they become binding. Our estimates indicate that, in the absence of other reforms that increased welfare use, FTP's time limit would have reduced welfare receipt by 16 percent.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 111 (2003)
Issue (Month): 3 (June)
Pages: 530-554
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Handle: RePEc:ucp:jpolec:v:111:y:2003:i:3:p:530-554

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. J. P. Ziliak & D. N. Figlio & E. E. Davis & L. S. Connolly, . "Accounting for the Decline in AFDC Caseloads: Welfare Reform or Economic Growth?," Institute for Research on Poverty Discussion Papers 1151-97, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  2. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March. [Downloadable!] (restricted)
  3. Rosenzweig, Mark R & Wolpin, Kenneth I, 1994. "Parental and Public Transfers to Young Women and Their Children," American Economic Review, American Economic Association, vol. 84(5), pages 1195-1212, December. [Downloadable!] (restricted)
  4. Greg J. Duncan & Kathleen Mullan Harris & Johanne Boisjoly, . "Time Limits and Welfare Reform: New Estimates of the Number and Characteristics of Affected Families," IPR working papers 97-3, Institute for Policy Resarch at Northwestern University.
  5. Rebecca M. Blank, 1997. "What Causes Public Assistance Caseloads to Grow?," NBER Working Papers 6343, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Greg Duncan & Kathleen Mullan Harris & Johanne Boisjoly, 1997. "Time Limits and Welfare Reform: New Estimates of the Number and Characteristics of Affected Families," JCPR Working Papers 1, Northwestern University/University of Chicago Joint Center for Poverty Research.
  7. Kornfeld, Robert & Bloom, Howard S, 1999. "Measuring Program Impacts on Earnings and Employment: Do Unemployment Insurance Wage Reports from Employers Agree with Surveys of Individuals?," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 168-97, January. [Downloadable!] (restricted)
  8. O'Neill, June A & Bassi, Laurie J & Wolf, Douglas A, 1987. "The Duration of Welfare Spells," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 241-48, May. [Downloadable!] (restricted)
  9. Rebecca M. Blank, 1999. "What Goes Up Must Come Down? Explaining Recent Changes in Public Assistance Caseloads," JCPR Working Papers 78, Northwestern University/University of Chicago Joint Center for Poverty Research.
  10. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marianne Bitler & Jonah Gelbach & Hilary Hoynes, 2003. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," NBER Working Papers 10121, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Oscar Mitnik, 2008. "How do Training Programs Assign Participants to Training? Characterizing the Assignment Rules of Government Agencies for Welfare-to-Work Programs in California," Working Papers 0907, University of Miami, Department of Economics. [Downloadable!]
    Other versions:
  3. Robert J. Lemke & Robert J. Witt & Ann Dryden Witte, 2004. "The Transition from Welfare to Work," Department of Economics Discussion Papers 0504, Department of Economics, University of Surrey. [Downloadable!]
    Other versions:
  4. Brian Jacob & Lars Lefgren & Enrico Moretti, 2004. "The Dynamics of Criminal Behavior: Evidence from Weather Shocks," NBER Working Papers 10739, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Jeffrey Grogger, 2001. "The Effects of Time Limits and Other Policy Changes on Welfare Use, Work, and Income Among Female-Headed Families," NBER Working Papers 8153, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Jonathan F. Pingle, 2003. "What if welfare had no work requirements? the age of youngest child exemption and the rise in employment of single mothers," Finance and Economics Discussion Series 2003-57, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  7. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2003. "Welfare Reform and Children's Living Arrangements," Working Papers 111, RAND Corporation Publications Department. [Downloadable!]
    Other versions:
  8. Jeffrey Grogger & Lynn A. Karoly, 2005. "Welfare Reform, Work and Wages: A Summary of the US Experience," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 3(2), pages 08-12, 07. [Downloadable!]
  9. Wolfgang Ochel, 2004. "Welfare Time Limits in the United States – Experiences with a New Welfare-to-Work Approach," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  10. Charles Michalopoulos, 2004. "Welfare Time Limits in the United States," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 2(2), pages 64-68, 07. [Downloadable!]
  11. Huffman, Sonya Kostova, 2001. "Welfare and Labor Force Participation of Low-Wealth Families: Implications for Labor Supply," Staff General Research Papers 1948, Iowa State University, Department of Economics. [Downloadable!]
    Other versions:
  12. Christopher A. Swann, 2004. "Welfare Reform when Recipients are Forward-Looking," Department of Economics Working Papers 04-04, Stony Brook University, Department of Economics. [Downloadable!]
  13. Adam Looney, 2005. "The effects of welfare reform and related policies on single mothers' welfare use and employment," Finance and Economics Discussion Series 2005-45, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  14. John M. Fitzgerald & David Ribar, 2001. "The Impact of Welfare Waivers on Female Headship Decisions," JCPR Working Papers 247, Northwestern University/University of Chicago Joint Center for Poverty Research.
    Other versions:
  15. Blundell, Richard & Meghir, Costas, 2002. "Active labour market policy vs employment tax credits: lessons from recent UK reforms," Working Paper Series 2002:1, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  16. Hal Snarr & Dan Axelsen, 2008. "Are Welfare Eligible Households Forward Looking?," Economics Bulletin, Economics Bulletin, vol. 9(8), pages 1-9. [Downloadable!]
  17. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  18. Nancy E. Reichman & Julien O. Teitler & Irwin Garfinkel & Sandra Garcia, 2004. "Variations in Maternal and Child Well-Being among Financially Eligible Mothers by TANF Participation Status," Eastern Economic Journal, Eastern Economic Association, vol. 30(1), pages 101-118, Winter. [Downloadable!]
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