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Instrumental Variable Estimates of the Labor Market Spillover Effects of Welfare Reform

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  • Timothy J. Bartik

    ()
    (W.E. Upjohn Institute for Employment Research)

Abstract

By increasing the labor supply of welfare recipients, welfare reform may reduce wages and increase unemployment among other less-educated groups. These "spillover effects" are difficult to estimate because welfare caseloads decrease in response to improvements in the economy, which leads caseload reductions to be associated with improvements in labor market outcomes. This paper corrects for the endogeneity of caseloads by using instruments that reflect policy. The estimates suggest that welfare reform has significant spillover effects: welfare reform reduces employment of male high school dropouts, and reduces wages of single mothers and male high school dropouts.

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Bibliographic Info

Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 02-78.

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Date of creation: Apr 2002
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Handle: RePEc:upj:weupjo:02-78

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Keywords: welfare; reform; spillover; effects; wages; employment; Bartik; Upjohn;

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  1. Jacob Alex Klerman & Steven J. Haider, 2004. "A Stock-Flow Analysis of the Welfare Caseload," Journal of Human Resources, University of Wisconsin Press, vol. 39(4).
  2. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  3. Rebecca M. Blank, 2000. "What Causes Public Assistance Caseloads to Grow?," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 18, Northwestern University/University of Chicago Joint Center for Poverty Research.
  4. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
  5. 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.
  6. Robert Moffitt, 2002. "The Temporary Assistance for Needy Families Program," NBER Working Papers 8749, National Bureau of Economic Research, Inc.
  7. Timothy J. Bartik & Randall W. Eberts, 199. "Examining the Effect of Industry Trends and Structure on Welfare Caseloads," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, in: Sheldon H. Danziger (ed.), Economic Conditions and Welfare Reform, chapter 5, pages 119-157 W.E. Upjohn Institute for Employment Research.
  8. Darren H. Lubotsky, 1999. "The Labor Market Effects of Welfare Reform," Labor and Demography, EconWPA 9904001, EconWPA.
  9. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, October.
  10. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, W.E. Upjohn Institute for Employment Research, number wbsle.
  11. Timothy J. Bartik, 1998. "The Labor Supply Effects of Welfare Reform," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 98-53, W.E. Upjohn Institute for Employment Research.
  12. Timothy J. Bartik, 2001. "Jobs for the Poor: Can Labor Demand Policies Help?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, W.E. Upjohn Institute for Employment Research, number tjb2001.
  13. David N. Figlio & James P. Ziliak, 1999. "Welfare Reform, the Business Cycle, and the Decline in AFDC Caseloads," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 77, Northwestern University/University of Chicago Joint Center for Poverty Research.
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