IDEAS home Printed from https://ideas.repec.org/a/anr/reveco/v10y2018p347-381.html

Welfare Reform and the Labor Market

Author

Listed:
  • Marc K. Chan

    (Department of Economics, University of Melbourne, Victoria 3010, Australia)

  • Robert Moffitt

    (Department of Economics, Johns Hopkins University, Baltimore, MD 21218, USA)

Abstract

This article reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, as well as the related empirical literature. We first present the canonical labor supply model of a classical welfare program and then extend this basic framework to include in-kind transfers, incomplete take-up, human capital, preference persistence, and borrowing and saving. The empirical literature on these models is presented. The negative income tax, earnings subsidies, US welfare reforms with features that differ from those in other countries, and childcare reforms are then surveyed in terms of both the theoretical models and the empirical literature surrounding each.

Suggested Citation

  • Marc K. Chan & Robert Moffitt, 2018. "Welfare Reform and the Labor Market," Annual Review of Economics, Annual Reviews, vol. 10(1), pages 347-381, August.
    • Handle: RePEc:anr:reveco:v:10:y:2018:p:347-381
    DOI: 10.1146/annurev-economics-080217-053452
    as

    Download full text from publisher

    File URL: https://doi.org/10.1146/annurev-economics-080217-053452
    Download Restriction: Full text downloads are only available to subscribers. Visit the abstract page for more information.
    File URL: https://libkey.io/10.1146/annurev-economics-080217-053452?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pritadrajati, Dyah, 2023. "Does social assistance disincentivise employment, job formality, and mobility?," Labour Economics, Elsevier, vol. 84(C).
    2. Ning Zhang, 2022. "In-kind housing transfers and labor supply: a structural approach," Economics Series Working Papers 992, University of Oxford, Department of Economics.
    3. Ning Zhang, 2022. "The Effect of Housing Assistance Program on Labor Supply and Family Formation," Working Papers 22-35, Center for Economic Studies, U.S. Census Bureau.
    4. Nauro F. Campos & Paul De Grauwe & Yuemei Ji, 2025. "Structural Reforms and Economic Performance: The Experience of Advanced Economies," Journal of Economic Literature, American Economic Association, vol. 63(1), pages 111-163, March.
    5. Sigurd Mølster Galaasen, 2021. "Pension Reform Disabled," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(4), pages 1227-1260, October.
    6. Robert A. Moffitt & Matthew V. Zahn, 2019. "A Model of the Marginal Labor Supply Response to Transfer Programs, with a Historical Illustration," NBER Working Papers 26028, National Bureau of Economic Research, Inc.
    7. Rukundo, Emmanuel Nshakira & Schroeder, Sarah & Hisarciklilar, Mehtap & McKay, Andrew D., 2024. "Health insurance premium changes and labor supply: Evidence from a low-income country," Ruhr Economic Papers 1103, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Verlaat, Timo & Todeschini, Federico & Ramos, Xavier, 2025. "The employment effects of a means-tested guaranteed income policy," Journal of Public Economics, Elsevier, vol. 248(C).
    9. Abrahams, Scott & Flabbi, Luca & Mabli, James, 2026. "Labor Market Dynamics and Public Assistance Programs: Evidence from an Estimated Model of SNAP Participation," IZA Discussion Papers 18392, IZA Network @ LISER.
    10. Sebastian Galiani & Juan Pantano, 2021. "Structural Models: Inception and Frontier," NBER Working Papers 28698, National Bureau of Economic Research, Inc.
    11. Jurgen Wiemers, 2025. "Non-Take-Up of Unemployment Benefit II in Germany: A Longitudinal Perspective Using Administrative Data," Papers 2508.21535, arXiv.org.
    12. Luduvice, André Victor Doherty, 2024. "The macroeconomic effects of universal basic income programs," Journal of Monetary Economics, Elsevier, vol. 148(C).
    13. Han, Jeehoon, 2022. "The impact of SNAP work requirements on labor supply," Labour Economics, Elsevier, vol. 74(C).
    14. Lars Højsgaard Andersen & Christian Dustmann & Rasmus Landersø, 2019. "Lowering Welfare Benefits: Intended and Unintended Consequences for Migrants and their Families," RFBerlin Discussion Paper Series 1905, ROCKWOOL Foundation Berlin (RFBerlin).
    15. Jianbo Jeff Luo, 2022. "Is Work a Burden? The Role of the Living Standard," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(1), pages 61-77, August.
    16. David Goll & Robert Joyce & Tom Waters, 2024. "Hours of work and the long‐run effects of in‐work transfers," Economica, London School of Economics and Political Science, vol. 91(364), pages 1222-1254, October.
    17. Bergolo, M. & Cruces, G., 2021. "The anatomy of behavioral responses to social assistance when informal employment is high," Journal of Public Economics, Elsevier, vol. 193(C).
    18. Moffitt, Robert A. & Zahn, Matthew V., 2022. "The Marginal Labor Supply Disincentives of Welfare: Evidence from Administrative Barriers to Participation," Economics Working Paper Archive 66674, The Johns Hopkins University,Department of Economics.
    19. Campos, Nauro F. & De Grauwe, Paul & Ji, Yuemei, 2025. "Structural reforms and economic performance: the experience of advanced economies," LSE Research Online Documents on Economics 120870, London School of Economics and Political Science, LSE Library.
    20. Verena Löffler, 2021. "Questioning the feasibility and justice of basic income accounting for migration," Politics, Philosophy & Economics, , vol. 20(3), pages 273-314, August.
    21. Masayoshi Hayashi, 2021. "Transfer Benefits, Implicit Taxes, and the Earnings of Welfare Recipients: Evidence from Public Assistance Programs in Japan," CIRJE F-Series CIRJE-F-1164, CIRJE, Faculty of Economics, University of Tokyo.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:anr:reveco:v:10:y:2018:p:347-381. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: http://www.annualreviews.org (email available below). General contact details of provider: http://www.annualreviews.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.