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Do social policy reforms have different impacts on employment and welfare use as economic conditions change?

  • Chris M. Herbst

    (School of Public Affairs, Arizona State University)

Registered author(s):

    This paper uses March Current Population Survey data from 1985 to 2004 to explore whether social policy reforms implemented throughout the 1990s have different impacts on employment and welfare use depending on economic conditions, a topic with important policy implications but which has received little attention from researchers. I find evidence that many reforms operate differently as labor market conditions fluctuate. Although social policies increase employment during economic slowdowns, the largest effects are generated in favorable labor market conditions. The impact of time limits, mandatory job search, and cash diversion programs are particularly sensitive to the macroeconomy, while the earned income tax credit is associated with similar employment effects in most environments. The results vary substantially across policy “carrots” and “sticks,” levels of work intensity, and subsamples of single mothers, but a tentative conclusion is that a strong economy reinforces the positive incentives created by social policy reforms. © 2008 by the Association for Public Policy Analysis and Management.

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    File URL: http://hdl.handle.net/10.1002/pam.20380
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    Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

    Volume (Year): 27 (2008)
    Issue (Month): 4 ()
    Pages: 867-894

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    Handle: RePEc:wly:jpamgt:v:27:y:2008:i:4:p:867-894
    Contact details of provider: Web page: http://www3.interscience.wiley.com/journal/34787/home

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    1. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes & Madeline Zavodny, 2002. "The impact of welfare reform on marriage and divorce," Working Paper 2002-9, Federal Reserve Bank of Atlanta.
    2. Timothy J. Bartik & Randall W. Eberts, 199. "Examining the Effect of Industry Trends and Structure on Welfare Caseloads," Book chapters authored by Upjohn Institute researchers, in: Sheldon H. Danziger (ed.), Economic Conditions and Welfare Reform, chapter 5, pages 119-157 W.E. Upjohn Institute for Employment Research.
    3. David N. Figlio & James P. Ziliak, 1999. "Welfare Reform, the Business Cycle, and the Decline in AFDC Caseloads," JCPR Working Papers 77, Northwestern University/University of Chicago Joint Center for Poverty Research.
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