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Explaining Welfare Reform: Public Choice and the Labor Market

  • Robert Moffitt

This paper seeks to identify factors which could plausibly have led to the contractionary welfare reform initiatives begun at the state and federal levels in the U.S. in the 1990s, initiatives concentrated on the AFDC program. A review of aggregate time series evidence, cross-section regression research, and studies of attitudes toward welfare spending and toward welfare recipients suggests a role for three types of factors. First, a major expansion of the U.S. welfare system in the late 1980s in terms of expenditures and caseloads may have led voters to desire to retrench by cutting back on the AFDC program, even though that program was not primarily responsible for the expansion. Second, declines in the relative and absolute levels of household income, wages, and employment rates among the disadvantaged population may have driven up caseloads and costs, increased the social distance of voters from the poor, heightened concern with work incentives, and may have led, more generally, to a decrease in the perceived deservingness of the poor. Third, a surge of births to unmarried mothers in the 1980s is suggested, by cross-sectional and attitudinal evidence, to have led to a reduction in voter support for the AFDC program. Copyright Kluwer Academic Publishers 1999

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File URL: http://hdl.handle.net/10.1023/A:1008782913069
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Article provided by Springer & International Institute of Public Finance in its journal International Tax and Public Finance.

Volume (Year): 6 (1999)
Issue (Month): 3 (August)
Pages: 289-315

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Handle: RePEc:kap:itaxpf:v:6:y:1999:i:3:p:289-315
DOI: 10.1023/A:1008782913069
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  1. Grossman, Herschel I., 1995. "Robin hood and the redistribution of property income," European Journal of Political Economy, Elsevier, vol. 11(3), pages 399-410, September.
  2. Robert Moffitt & David Ribar & Mark Wilhelm, 1998. "The Decline of Welfare Benefits in the US: The Role of Wage Inequality," Economics Working Paper Archive 373, The Johns Hopkins University,Department of Economics.
  3. Orr, Larry L, 1976. "Income Transfers as a Public Good: An Application to AFDC," American Economic Review, American Economic Association, vol. 66(3), pages 359-71, June.
  4. Poterba, James M, 1994. "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 799-821, August.
  5. Peter Lindert & Wen Hai & Shunli Yao, 2003. "Three Centuries Of Inequality In Britain And America," Working Papers 979, University of California, Davis, Department of Economics.
  6. Robert A. Moffitt, 1999. "Demographic Change and Public Assistance Expenditures," NBER Working Papers 6995, National Bureau of Economic Research, Inc.
  7. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
  8. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
  9. Jason Barabas, 1998. "Wage Erosion, Economic Assessments, and Social Welfare Opinions," JCPR Working Papers 56, Northwestern University/University of Chicago Joint Center for Poverty Research.
  10. Preston, Ian & Ridge, Michael, 1995. "Demand for Local Public Spending: Evidence from the British Social Attitudes Survey," Economic Journal, Royal Economic Society, vol. 105(430), pages 644-60, May.
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  12. Boadway, Robin & Keen, Michael, 2000. "Redistribution," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 12, pages 677-789 Elsevier.
  13. Shroder, Mark, 1995. "Games the States Don't Play: Welfare Benefits and the Theory of Fiscal Federalism," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 183-91, February.
  14. Sam Peltzman, 1980. "The Growth of Government," University of Chicago - George G. Stigler Center for Study of Economy and State 1, Chicago - Center for Study of Economy and State.
  15. Rebecca M. Blank, 2000. "What Causes Public Assistance Caseloads to Grow?," JCPR Working Papers 18, Northwestern University/University of Chicago Joint Center for Poverty Research.
  16. Anne E. Winkler, 1998. "State Experimentation With Time-Limited AFDC Benefits: What Differentiates Reform-Minded States From Others?," Public Finance Review, SAGE Publishing, vol. 26(2), pages 155-183, March.
  17. Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August.
  18. Hall, John & Preston, Ian, 2000. "Tax price effects on attitudes to hypothecated tax increases," Journal of Public Economics, Elsevier, vol. 75(3), pages 417-438, March.
  19. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  20. David C. Ribar & Mark O. Wilhelm, 1999. "The Demand for Welfare Generosity," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 96-108, February.
  21. Peter H. Lindert, . "Three Centuries Of Inequality In Britain And America," Department of Economics 97-09, California Davis - Department of Economics.
  22. Chinhui Juhn & Kevin M. Murphy & Robert H. Topel, 1991. "Why Has the Natural Rate of Unemployment Increased over Time?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 75-142.
  23. Howard Chernick, 1998. "Fiscal Effects of Block Grants for the Needy: An Interpretation of the Evidence," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(2), pages 205-233, May.
  24. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
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