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Are Welfare Eligible Households Forward Looking?

Author

Listed:
  • Hal Snarr

    (North Carolina A & T State University)

  • Dan Axelsen

    (PricewaterhouseCoopers LLP)

Abstract

A consensus has formed in the welfare reform literature suggesting that welfare eligible households (WEH) “bank” benefits in the presence of time limits, either by delaying enrollment in welfare or exiting well before the time limit is reached. In this study, we use the standard labor-leisure lifetime utility to analyze the behavioral effects of imposing time limits on welfare use. Our approach is different from our predecessors (which model welfare participation) in that we model delayed enrollment in and early exit from welfare. Our results suggest that prior to time limits, WEH enroll in welfare as soon as eligibility is established and remain on assistance programs until their youngest children reach adulthood. Moreover, time limits do not alter this behavior in WEH with older children. As such, being “forward looking” in an era of time limits is not a sufficient condition for banking welfare benefits.

Suggested Citation

  • Hal Snarr & Dan Axelsen, 2008. "Are Welfare Eligible Households Forward Looking?," Economics Bulletin, AccessEcon, vol. 9(8), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-08i30020
    as

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    References listed on IDEAS

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    1. Jeffrey Grogger, 2003. "The Effects of Time Limits, the EITC, and Other Policy Changes on Welfare Use, Work, and Income among Female-Headed Families," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 394-408, May.
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    More about this item

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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