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Displacement and Wage Effects of Welfare Reform

In: Finding Jobs: Work and Welfare Reform


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In this paper, I consider the displacement and wage effects of welfare reform. Recent welfare reforms are pushing welfare recipients into the labor market. Will jobs obtained by ex-welfare recipients come at the expense of others, who will be "displaced" by losing jobs or having fewer job vacancies available? Will the increased labor supply of welfare recipients stimulate job creation? Will the increased labor supply of welfare recipients depress wages overall, or for women with little education? To address these questions, in this paper I will: provide estimates of how welfare reform will affect labor supply; discuss the forces influencing displacement and wage effects of welfare reform; review previous estimates of wage effects that will occur because of welfare reform; provide new simulations, using several methodologies and estimates, of the displacement and wage effects that will occur because of welfare reform. explore what we can see so far about the labor market effects of welfare reform.

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This chapter was published in: David E. Card & Rebecca M. Blank (ed.) Finding Jobs: Work and Welfare Reform, Russell Sage Foundation, pages 72-122, 2000.

This item is provided by W.E. Upjohn Institute for Employment Research in its series Book chapters authored by Upjohn Institute researchers with number tjbrsf.

Handle: RePEc:upj:uchaps:tjbrsf

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Keywords: welfare reform; displacement; wage effects;

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Cited by:
  1. Darren H. Lubotsky, 1999. "The Labor Market Effects of Welfare Reform," Labor and Demography 9904001, EconWPA.
  2. Rebecca M. Blank, 2001. "Declining caseloads/increased work: what can we conclude about the effects of welfare reform?," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 25-36.
  3. Peter B. Dixon & Maureen T. Rimmer, 2005. "The Displacement Effect of Labour-Market Programs: Estimates from the MONASH Model," Centre of Policy Studies/IMPACT Centre Working Papers g-154, Victoria University, Centre of Policy Studies/IMPACT Centre.


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