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Does it pay to move from welfare to work?

Author

Listed:
  • Sheldon Danziger

    (Gerald R. Ford School, University of Michigan)

  • Colleen M. Heflin

    (University of Kentucky)

  • Mary E. Corcoran

    (Gerald R. Ford School, University of Michigan)

  • Elizabeth Oltmans

    (Massachusetts Institute of Technology)

  • Hui-Chen Wang

    (University of Michigan)

Abstract

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act requires welfare recipients to look for work and has made it more difficult for nonworking recipients to remain on the welfare rolls. In addition, the economic boom of the 1990s and changes in federal and state policies have raised the net income gain associated with moving from welfare to work. This paper analyzes data from a panel survey of single mothers, all of whom received welfare in February 1997. In 1999, those who left welfare and were working had a higher household income and lower poverty rate, experienced a similar level of material hardship, engaged in fewer activities to make ends meet, and had lower expectations of experiencing hardship in the near future than did nonworking welfare recipients. Estimations of fixed-effect regressions of income that control for both observable and unobservable time-invariant characteristics show that monthly net income increases by $2.63 for every additional hour of work effort. About 60 percent of the observed monthly income difference between wage-reliant and welfare-reliant mothers can be attributed to differences in their work effort. Thus, after welfare reform, it does pay to move from welfare to work. © 2002 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • Sheldon Danziger & Colleen M. Heflin & Mary E. Corcoran & Elizabeth Oltmans & Hui-Chen Wang, 2002. "Does it pay to move from welfare to work?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(4), pages 671-692.
  • Handle: RePEc:wly:jpamgt:v:21:y:2002:i:4:p:671-692
    DOI: 10.1002/pam.10080
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    References listed on IDEAS

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    1. repec:mpr:mprres:3233 is not listed on IDEAS
    2. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    3. 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.
    4. Sheldon H. Danziger (ed.), 1999. "Economic Conditions and Welfare Reform," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ecwr, November.
    5. 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.
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    Citations

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    Cited by:

    1. James P. Ziliak, 2015. "Temporary Assistance for Needy Families," NBER Chapters,in: Economics of Means-Tested Transfer Programs in the United States, Volume 1, pages 303-393 National Bureau of Economic Research, Inc.
    2. Timothy Smeeding, 2005. "Poor People in Rich Nations: The United States in Comparative Perspective," LIS Working papers 419, LIS Cross-National Data Center in Luxembourg.
    3. Ayala, Luis & Rodríguez, Magdalena, 2013. "Health-related effects of welfare-to-work policies," Social Science & Medicine, Elsevier, vol. 93(C), pages 103-112.
    4. Wu, Chi-Fang, 2011. "Long-term employment and earnings among low-income families with children," Children and Youth Services Review, Elsevier, vol. 33(1), pages 91-101, January.
    5. Hirasuna, Donald P. & Stinson, Thomas F., 2004. "Urban And Rural Differences In Utilization Of State Earned Income Tax Credit Programs: Minnesota'S Experience," Working Papers 18912, Oregon State University, Rural Poverty Research Center (RPRC).
    6. Ayala, Luis & Navarro, Carolina, 2007. "The dynamics of housing deprivation," Journal of Housing Economics, Elsevier, vol. 16(1), pages 72-97, March.
    7. Karen Christopher, 2007. "Reassessing welfare reform data: a response to cherry," Feminist Economics, Taylor & Francis Journals, vol. 13(2), pages 197-202.
    8. Michelle Livermore & Rebecca Powers & Belinda Davis & Younghee Lim, 2011. "Failing to Make Ends Meet: Dubious Financial Success Among Employed Former Welfare to Work Program Participants," Journal of Family and Economic Issues, Springer, vol. 32(1), pages 73-83, March.
    9. Robert Cherry, 2007. "Assessing welfare reform data: a comment on christopher," Feminist Economics, Taylor & Francis Journals, vol. 13(2), pages 185-195.
    10. Lincoln H. Groves, 2016. "Welfare Reform and Labor Force Exit by Young, Low-Skilled Single Males," Demography, Springer;Population Association of America (PAA), vol. 53(2), pages 393-418, April.
    11. Berg, Nathan & Murdoch, James, 2008. "Access to grocery stores in Dallas," MPRA Paper 26585, University Library of Munich, Germany.
    12. Robert Moffitt & Katie Winder, 2005. "Does it pay to move from welfare to work? A comment on Danziger, Heflin, Corcoran, Oltmans, and Wang," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(2), pages 399-409.
    13. Roderick Rose & Susan Parish & Joan Yoo, 2009. "Measuring Material Hardship among the US Population of Women with Disabilities Using Latent Class Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 94(3), pages 391-415, December.
    14. Lewis, Dan & Konstantopoulos, Spyros & Altenbernd, Lisa, 2005. "The Correlates of Work in a Post-AFDC World: The Results from a Longitudinal State-Level Analysis," IZA Discussion Papers 1626, Institute for the Study of Labor (IZA).
    15. Kalil, Ariel & Dunifon, Rachel, 2007. "Maternal work and welfare use and child well-being: Evidence from 6 years of data from the Women's Employment Study," Children and Youth Services Review, Elsevier, vol. 29(6), pages 742-761, June.
    16. Geoffrey L. Wallace & Robert Haveman, 2007. "The implications of differences between employer and worker employment|earnings reports for policy evaluation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(4), pages 737-754.
    17. Timothy Smeeding, 2006. "Poor People in Rich Nations: The United States in Comparative Perspective," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 69-90, Winter.
    18. Kwon, Hyeok Chang & Meyer, Daniel R., 2011. "How do economic downturns affect welfare leavers? A comparison of two cohorts," Children and Youth Services Review, Elsevier, vol. 33(5), pages 588-597, May.
    19. Steven J. Haider & Kathleen McGarry, 2005. "Recent Trends in Resource Sharing Among the Poor," NBER Working Papers 11612, National Bureau of Economic Research, Inc.

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