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The effect of transfer payments on the labor supply of single mothers

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  • Frish, Roni
  • Zussman, Noam

Abstract

The Single Parent Family Law came into effect in Israel in 1992. It increased the income maintenance allowance paid to single mothers who have little or no income. In order to identify the effect of this legislative change on the labor supply of single mothers, the study uses a unique panel containing rich socioeconomic data. Applying a variety of econometric methods (difference-in-differences, panel regressions and propensity score matching), the study found that following the enactment of the law the labor supply of uneducated single mothers fell by about 10%, due to a decrease in the employment rate and working hours. However, from an economic perspective, the effect of the Law on the labor supply of single mothers is not very significant.

Suggested Citation

  • Frish, Roni & Zussman, Noam, 2008. "The effect of transfer payments on the labor supply of single mothers," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(2), pages 627-643, April.
  • Handle: RePEc:eee:soceco:v:37:y:2008:i:2:p:627-643
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    References listed on IDEAS

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    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.
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    3. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    4. Francine D. Blau & Lawrence M. Kahn & FJane Waldfogel, 2004. "The Impact of Welfare Benefits on Single Motherhood and Headship of Young Women: Evidence from the Census," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    5. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
    6. Gonzalez, Libertad, 2004. "Single Mothers and Work," IZA Discussion Papers 1097, Institute for the Study of Labor (IZA).
    7. Bruce D. Meyer & Dan T. Rosenbaum, 1999. "Making Single Mothers Work: Recent Tax and Welfare Policy and its Effects," JCPR Working Papers 152, Northwestern University/University of Chicago Joint Center for Poverty Research.
    8. Paul Gregg & Susan Harkness, 2003. "Welfare Reform and Lone Parents Employment in the UK," The Centre for Market and Public Organisation 03/072, Department of Economics, University of Bristol, UK.
    9. Meyer, Bruce D. & Rosenbaum, Dan T., 2000. "Making Single Mothers Work: Recent Tax and Welfare Policy and Its Effects," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(4), pages 1027-1062, December.
    10. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
    11. Denise J. Doiron, 2004. "Welfare Reform and the Labour Supply of Lone Parents in Australia: A Natural Experiment Approach," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 157-176, June.
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