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Are lone mothers responsive to policy changes? The effects of a Norwegian workfare reform on earnings, education and poverty

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  • Magne Mogstad
  • Chiara Pronzato

Abstract

The generous Nordic model of welfare is commonly viewed as an exceptional success, in terms of both equality and economic growth. However, it recently became evident that subgroups of the population with weak labour market attachment and high welfare dependency, such as lone mothers, were vastly overrepresented among the poor. This prompted a workfare reform of the Norwegian welfare system for lone mothers: activity requirements were brought in, time limits imposed and benefit levels raised. To evaluate the reform we introduce an estimator that, unlike the much used difference-in-difference approach, accounts for the fact that policy changes are typically phased in gradually rather than coming into full effect immediately. The results were striking: the workfare reform has not only led to increased earnings and educational attainment but also reduced poverty.

Suggested Citation

  • Magne Mogstad & Chiara Pronzato, 2008. "Are lone mothers responsive to policy changes? The effects of a Norwegian workfare reform on earnings, education and poverty," Working Papers 008, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
  • Handle: RePEc:don:donwpa:008
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Drange, Nina & Rege, Mari, 2013. "Trapped at home: The effect of mothers' temporary labor market exits on their subsequent work career," Labour Economics, Elsevier, vol. 24(C), pages 125-136.
    2. Chiara Daniela Pronzato, 2015. "Fighting Lone Mothers’ Poverty Through In-Work Benefits: Methodological Issues and Policy Suggestions," CESifo Economic Studies, CESifo, vol. 61(1), pages 95-122.
    3. Pronzato, Chiara D., 2012. "Comparing Quasi-Experimental Designs and Structural Models for Policy Evaluation: The Case of a Reform of Lone Parental Welfare," IZA Discussion Papers 6803, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    welfare; lone mothers; workfare reform; difference-in-difference; activity requirements; time limits; earnings; education; poverty;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J00 - Labor and Demographic Economics - - General - - - General

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