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Separating Psychological Costs from Time Costs: Female Labor Supply and Participation in Food Stamps and WIC

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  • Colleen Flaherty

    ()
    (Department of Economics, Stanford University)

  • Kevin Mumford

    ()
    (Department of Economics, Stanford University)

Abstract

Many individuals who are eligible for welfare choose not to participate. This well-documented fact suggests that there is a utility cost associated with welfare participation. Previous studies have produced estimates of how large this cost would have to be to explain the observed degree of non-participation. Prior estimates of this utility cost have not differentiated psychological costs of participation from the time and effort required to become eligible and maintain eligibility (time costs). This paper develops a structural model that allows for the separate estimation of these two types of costs associated with welfare participation in dollar terms. The estimation suggests that psychological costs are three times larger than the time costs of welfare participation.

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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 06-024.

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Date of creation: Feb 2007
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Handle: RePEc:sip:dpaper:06-024

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Related research

Keywords: welfare; psychological cost; time cost;

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References

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  1. Robert A. Moffitt, 2003. "Means-Tested Transfer Programs in the United States," NBER Books, National Bureau of Economic Research, Inc, number moff03-1.
  2. Michael P. Keane & Robert Moffitt, 1995. "A structural model of multiple welfare program participation and labor supply," Working Papers 557, Federal Reserve Bank of Minneapolis.
  3. Blundell, Richard & Fry, Vanessa & Walker, Ian, 1987. "Modelling the Take-up of Means-tested Benefits: the Case of Housing Benefits in the United Kingdom," Economic Journal, Royal Economic Society, vol. 98(390), pages 58-74, Supplemen.
  4. Stuber, Jennifer & Schlesinger, Mark, 2006. "Sources of stigma for means-tested government programs," Social Science & Medicine, Elsevier, vol. 63(4), pages 933-945, August.
  5. Riphahn, Regina T., 2000. "Rational Poverty or Poor Rationality? The Take-up of Social Assistance Benefits," IZA Discussion Papers 124, Institute for the Study of Labor (IZA).
  6. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  7. 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.
  8. Robert A. Moffitt, 2003. "Introduction to "Means-Tested Transfer Programs in the United States"," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 1-14 National Bureau of Economic Research, Inc.
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