IDEAS home Printed from https://ideas.repec.org/a/bla/scandj/v114y2012i4p1129-1159.html
   My bibliography  Save this article

Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State

Author

Listed:
  • Magne Mogstad
  • Chiara Pronzato

Abstract

There is a heated debate in many European countries about a move towards a welfare system that increases the incentives for lone mothers to move off welfare and into work. We analyze the consequences of a major Norwegian workfare reform of the generous welfare system for lone mothers. Our difference-in-differences estimates show that the policy changes were successful in improving labor market attachment and increasing disposable income of new lone mothers. By contrast, the reform led to a substantial decrease in disposable income and a significant increase in poverty among persistent lone mothers, because a sizeable group was unable to offset the loss of out-of-work welfare benefits with gains in earnings. This suggests that the desired effects of the workfare reform were associated with the side-effects of income loss and increased poverty among a substantial number of lone mothers with insurmountable employment barriers. This finding stands in stark contrast to evidence from similar policy changes in Canada, the UK, and the US, and underscores that policymakers from other developed countries should be cautious when drawing lessons from the successful welfare reforms implemented in Anglo-Saxon countries.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Magne Mogstad & Chiara Pronzato, 2012. "Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1129-1159, December.
  • Handle: RePEc:bla:scandj:v:114:y:2012:i:4:p:1129-1159
    DOI: j.1467-9442.2012.01722.x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1467-9442.2012.01722.x
    Download Restriction: Access to full text is restricted to subscribers.

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

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bruce D. Meyer & Dan T. Rosenbaum, 2001. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 1063-1114.
    2. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    3. Alberto F. Alesina & Edward L. Glaeser & Bruce Sacerdote, 2006. "Work and Leisure in the U.S. and Europe: Why So Different?," NBER Chapters,in: NBER Macroeconomics Annual 2005, Volume 20, pages 1-100 National Bureau of Economic Research, Inc.
    4. Michalopoulos, Charles & Robins, Philip K. & Card, David, 2005. "When financial work incentives pay for themselves: evidence from a randomized social experiment for welfare recipients," Journal of Public Economics, Elsevier, vol. 89(1), pages 5-29, January.
    5. Christopher A. Swann, 2005. "Welfare Reform When Recipients Are Forward-Looking," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    6. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
    7. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
    8. Conny Olovsson, 2009. "Why Do Europeans Work So Little?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 39-61, February.
    9. David Card & Dean R. Hyslop, 2006. "The Dynamic Effects of an Earnings Subsidy for Long-Term Welfare Recipients: Evidence from the SSP Applicant Experiment," NBER Working Papers 12774, National Bureau of Economic Research, Inc.
    10. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 605-637.
    11. Jeffrey Grogger & Charles Michalopoulos, 2003. "Welfare Dynamics under Time Limits," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 530-554, June.
    12. Bitler, Marianne P. & Gelbach, Jonah B. & Hoynes, Hilary W., 2008. "Distributional impacts of the Self-Sufficiency Project," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 748-765, April.
    13. Ghazala Naz, 2004. "The impact of cash-benefit reform on parents’ labour force participation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 369-383, June.
    14. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    15. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    16. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
    17. Marco Francesconi & Wilbert van der Klaauw, 2007. "The Socioeconomic Consequences of "In-Work" Benefit Reform for British Lone Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
    18. Mike Brewer & Marco Francesconi & Paul Gregg & Jeffrey Grogger, 2009. "Feature: In-work Benefit Reform in a Cross-National Perspective - Introduction," Economic Journal, Royal Economic Society, vol. 119(535), pages 1-14, February.
    19. John F. Ermisch & Robert E. Wright, 1991. "Welfare Benefits and Lone Parents' Employment in Great Britain," Journal of Human Resources, University of Wisconsin Press, vol. 26(3), pages 424-456.
    20. Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Kory Kroft & Kucko Kavan & Etienne Lehmann & Johannes Schmieder, 2015. "Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach," Working Papers hal-01292126, HAL.
    2. Hartley, Robert Paul & Lamarche, Carlos, 2017. "Behavioral Responses and Welfare Reform: Evidence from a Randomized Experiment," IZA Discussion Papers 10905, Institute for the Study of Labor (IZA).
    3. Drange, Nina & Rege, Mari, 2013. "Trapped at home: The effect of mothers' temporary labor market exits on their subsequent work career," Labour Economics, Elsevier, vol. 24(C), pages 125-136.
    4. Løken, Katrine V. & Lommerud, Kjell Erik & Reiso, Katrine Holm, 2014. "Single Mothers and their children: Evaluating a work-encouraging welfare reform," Working Papers in Economics 04/14, University of Bergen, Department of Economics.
    5. Chiara Daniela Pronzato, 2015. "Fighting Lone Mothers’ Poverty Through In-Work Benefits: Methodological Issues and Policy Suggestions," CESifo Economic Studies, CESifo, vol. 61(1), pages 95-122.
    6. Kalíšková, Klára, 2014. "Labor supply consequences of family taxation: Evidence from the Czech Republic," Labour Economics, Elsevier, vol. 30(C), pages 234-244.
    7. Matteo Migheli, 2016. "Behind the Wall: What Remains of the “Communist Legacy” in Contemporary Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 671-690, June.
    8. Wildeman, Christopher & Fallesen, Peter, 2017. "The effect of lowering welfare payment ceilings on children's risk of out-of-home placement," Children and Youth Services Review, Elsevier, vol. 72(C), pages 82-90.
    9. Chiara Daniela Pronzato, 2014. "Fighting Lone Mothers’ Poverty through In-Work Benefits. Methodological Issues and Policy Suggestions," CHILD Working Papers Series 23, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    10. Reiso, Katrine Holm, 2014. "The Effect of Welfare Reforms on Benefit Substitution," Discussion Paper Series in Economics 22/2014, Norwegian School of Economics, Department of Economics.
    11. Pronzato, Chiara D., 2012. "Comparing Quasi-Experimental Designs and Structural Models for Policy Evaluation: The Case of a Reform of Lone Parental Welfare," IZA Discussion Papers 6803, Institute for the Study of Labor (IZA).
    12. Chan, Marc K. & Liu, Kai, 2015. "Life-Cycle and Intergenerational Effects of Child Care Reforms," IZA Discussion Papers 9377, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J00 - Labor and Demographic Economics - - General - - - General

    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:bla:scandj:v:114:y:2012:i:4:p:1129-1159. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442 .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.