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Work, Welfare, and Family Structure: What Have We Learned?

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  • Hilary Williamson Hoynes

Abstract

Welfare reform has once again made its way to the top of the domestic policy agenda. While part of the motivation behind recent reform efforts is fiscally driven, there is also an interest in making changes that address two prominent criticisms of the existing system of public assistance in the United States. First, the system has significant, adverse work incentives. Second, the system discourages the formation of two-parent families and is responsible in a major part for the high and rising rates of female headship and out-of-wedlock birth rates. This paper explores the validity of these criticisms using available empirical evidence and in turn evaluates the impact of various reforms to the system. The programs examined include Aid to Families with Dependent Children Food Stamps and Medicaid programs. The paper relies on evidence based on three sources of variation in welfare policy: cross-state variation, over time variation, and demonstration projects at the state level. The paper concludes that current reforms aimed at reducing female headship and nonmarital births such as family caps, eliminating benefits for teens, and equal treatment of two-parent families are unlikely to create large effects. Changes to implicit tax rates and benefit formulas may increase work among current recipients, but overall work effort may not be affected. These predictions should be accompanied by a word of caution. Many of the proposed changes have never been implemented at the state or federal level and require out of sample predictions. Current state experimentation may help fill this gap.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5644.

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Date of creation: Jul 1996
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Publication status: published as Fiscal Policy: Lessons From Economic Research, Auerbach, Alan, ed., Cambridge: Cambridge University Press, 1997, 101-146.
Handle: RePEc:nbr:nberwo:5644

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References

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  1. Robert Moffitt, 1994. "Welfare Effects on Female Headship with Area Effects," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 621-636.
  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.
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Cited by:
  1. Thomas J. Nechyba, 2001. "Social Approval, Values, and AFDC: A Reexamination of the Illegitimacy Debate," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 637-666, June.
  2. Fitzgerald, John M. & Ribar, David C., 2003. "Transitions in Welfare Participation and Female Headship," IZA Discussion Papers 895, Institute for the Study of Labor (IZA).
  3. Mickey Hepner & W. Robert Reed, 2004. "The Effect of Welfare on Work and Marriage: A View from the States," Cato Journal, Cato Journal, Cato Institute, vol. 24(3), pages 349-370, Fall.
  4. Carrington, William J. & Mueser, Peter R. & Troske, Kenneth, 2002. "The Impact of Welfare Reform on Leaver Characteristics, Employment and Recidivism," IZA Discussion Papers 561, Institute for the Study of Labor (IZA).
  5. Robert A. Moffitt, 1999. "Demographic Change and Public Assistance Expenditures," NBER Working Papers 6995, National Bureau of Economic Research, Inc.
  6. Ellwood, David T. & Jencks, Christopher, 2004. "The Spread of Single-Parent Families in the United States since 1960," Working Paper Series rwp04-008, Harvard University, John F. Kennedy School of Government.
  7. repec:ese:emodwp:em7-08 is not listed on IDEAS
  8. Christina Paxson & Jane Waldfogel, 2002. "Work, Welfare, and Child Maltreatment," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 435-474, July.
  9. Daniel Parent & Ling Wang, 2002. "Tax Incentives and Fertility in Canada: Permanent vs. Transitory Effects," CIRANO Working Papers 2002s-29, CIRANO.
  10. Nezih Guner & John Knowles, 2000. "Marriage, Fertility And Divorce: A Dynamic Equilibrium Analysis Of Social Policy In Canada," Computing in Economics and Finance 2000 352, Society for Computational Economics.
  11. H. J. Holzer, . "Employer Demand, AFDC Recipients, and Labor Market Policy," Institute for Research on Poverty Discussion Papers 1115-96, University of Wisconsin Institute for Research on Poverty.
  12. Peter R. Mueser & Kenneth R. Troske & David R. Stevens, 2007. "The Impact of Welfare Reform on Leaver Characteristics, Employment and Recidivism: An Analysis of Maryland and Missouri," Working Papers 0720, Department of Economics, University of Missouri.
  13. Daniel Chen, 2011. "Can countries reverse fertility decline? Evidence from France’s marriage and baby bonuses, 1929–1981," International Tax and Public Finance, Springer, vol. 18(3), pages 253-272, June.
  14. Williamson Hoyne, Hilary, 1997. "Does welfare play any role in female headship decisions?," Journal of Public Economics, Elsevier, vol. 65(2), pages 89-117, August.
  15. Robert A. Pollak, 1998. "Notes on How Economists Think . . ," JCPR Working Papers 35, Northwestern University/University of Chicago Joint Center for Poverty Research.
  16. Anandi Mani & Charles H. Mullin, 2001. "Social Approval and Teenage Childbearing," Vanderbilt University Department of Economics Working Papers 0103, Vanderbilt University Department of Economics.

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