Does Benefit Receipt Affect Future Income? An Econometric Explanation

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Does Benefit Receipt Affect Future Income? An Econometric Explanation

Author Info

Dean Hyslop () (Policy Coordination and Development, The Treasury and Department of Economics, UCLA)

Abstract

This paper provides an econometric analysis of the effects of receiving welfare benefits on individuals’ future income, using longitudinal administrative data on individual incomes. After controlling for heterogeneous differences in individual incomes, spurious effects of contemporaneous benefit receipt and possible endogeneity with incomes, there is no systematic evidence of a positive or negative effect of benefit receipt on incomes. The results are generally imprecisely estimated and sensitive to the choice of specification. Also, a simple first-order specification with unobserved heterogeneity provides a reasonable characterisation of individual income dynamics, although formal statistical tests tend to reject this specification as being too parsimonious.

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Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 00/14.

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Length: 20 pages
Date of creation: 2000
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Handle: RePEc:nzt:nztwps:00/14

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This paper has been announced in the following NEP Reports:

NEP-ALL-2001-09-26 (All new papers)

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.:

Beaudry, Paul & DiNardo, John, 1991. "The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 665-88, August. [Downloadable!] (restricted)
Plant, Mark W, 1984. "An Empirical Analysis of Welfare Dependence," American Economic Review, American Economic Association, vol. 74(4), pages 673-84, September. [Downloadable!] (restricted)
Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February. [Downloadable!] (restricted)

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This page was last updated on 2008-11-13.

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