The Decline of Welfare Benefits in the US: The Role of Wage Inequality
AbstractWelfare benefits in the US have experiences a much-studies secular decline since the mid-1970s We explore a new hypothesis for this decline related to the increase in wage inequality in the labor market and the decline of real wages at the bottom of the market and the decline of real wages at the bottom of the distribution: we posit that voters prefer benefits which are tied to low-skilled wages We test the hypothesis using a 1969-1992 panel of low-skilled wages We test the hypothesis using a 1969-1992 panel of state-level data An additional contribution of our analysis is the use of General Social Survey data on voter preferences for welfare which we combine with Current Population Survey data to determine the voter in each state who has the median preferred welfare benefit level Our analysis reveals considerable evidence in support of a role for declining real wages in the decline of welfare benefits
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Bibliographic InfoPaper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 373.
Date of creation: Jun 1998
Date of revision:
Other versions of this item:
- Moffitt, Robert & Ribar, David & Wilhelm, Mark, 1998. "The decline of welfare benefits in the U.S.: the role of wage inequality," Journal of Public Economics, Elsevier, vol. 68(3), pages 421-452, June.
- Robert Moffitt & David Ribar & Mark Wilhelm, 1996. "The Decline of Welfare Benefits in the U.S.: The Role of Wage Inequality," NBER Working Papers 5774, National Bureau of Economic Research, Inc.
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
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