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Marriage, Labor Supply and the Dynamics of the Social Safety Net

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The 1996 US welfare reform introduced time limits on welfare receipt. We use quasi-experimental evidence and a lifecycle model of marriage, divorce, program participa-tion, labor supply and savings to understand the impact of time limits on behavior and well-being. Time limits cause women to defer claiming in anticipation of future needs, an effect that depends on the probabilities of marriage and divorce. Time limits cost women 0.5% of life-time consumption, net of revenue savings redistributed by reduced taxation, with some groups affected much more. Expectations over future marital status are important determinants of the value of the social safety net.

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  • Hamish Low & Costas Meghir & Luigi Pistaferri & Alessandra Voena, 2022. "Marriage, Labor Supply and the Dynamics of the Social Safety Net," Cowles Foundation Discussion Papers 2121R, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2121r
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    Cited by:

    1. Nezih Guner & Remzi Kaygusuz & Gustavo Ventura, 2023. "Rethinking the Welfare State," Econometrica, Econometric Society, vol. 91(6), pages 2261-2294, November.
    2. Minsu Chang, 2024. "Changing Marital Transitions and Homeownership Among Young Households," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 52, pages 46-63, April.

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    More about this item

    Keywords

    Time limits; Welfare reform; Life-cycle; marriage and divorce; time limits; limited commitment; intrahousehold allocations;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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