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Financial incentives and welfare reform in the United States

Author

Listed:
  • Philip K Robins

    (University of Miami, Coral Gables)

  • Charles Michalopoulos

    (MDRC, New York)

  • Elsie Pan

    (MDRC, New York)

Abstract

This paper uses a microsimulation model to ask whether welfare recipients in the United States would work full-time if offered an earnings supplement that was conditioned on full-time employment. The simulations suggest that the earnings supplement would increase full-time employment, with little additional cash transfer cost to the government. In contrast, financial incentives currently being used by many of the states are increasing employment and income, but are encouraging primarily part-time employment. Encouraging full-time employment is particularly important in light of new time limits on welfare receipt. Faced with a loss of welfare benefits, many recipients may find that part-time earnings do not allow them to be economically self-sufficient. © 2001 by the Association of Public Policy Analysis and Management.

Suggested Citation

  • Philip K Robins & Charles Michalopoulos & Elsie Pan, 2001. "Financial incentives and welfare reform in the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(1), pages 129-150.
    • Handle: RePEc:wly:jpamgt:v:20:y:2001:i:1:p:129-150
    DOI: 10.1002/1520-6688(200124)20:1<129::AID-PAM1007>3.0.CO;2-M
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    References listed on IDEAS

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    1. Rebecca M. Blank & David Card & Philip K. Robins, 1999. "Financial Incentives for Increasing Work and Income Among Low- Income Families," HEW 9902002, University Library of Munich, Germany.
    2. Charles Michalopoulos & Philip K. Robins & David Card, 2000. "When Financial Incentives Pay for Themselves: Early Findings from the Self-Sufficiency Project's Applicant Study," JCPR Working Papers 133, Northwestern University/University of Chicago Joint Center for Poverty Research.
    3. David Card & Philip K. Robins, 1996. "Do Financial Incentives Encourage Welfare Recipients to Work? Evidence from a Randomized Evaluation of the Self-Sufficiency Project," NBER Working Papers 5701, National Bureau of Economic Research, Inc.
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