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

  • Magne Mogstad
  • Chiara Pronzato

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.

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Paper provided by "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi in its series Working Papers with number 008.

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Length: 27 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:don:donwpa:008
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  2. Bruce D. Meyer & Dan T. Rosenbaum, 1998. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," JCPR Working Papers 32, Northwestern University/University of Chicago Joint Center for Poverty Research.
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  9. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
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  12. V. Joseph Hotz & Charles H. Mullin & John Karl Scholz, 2002. "Welfare, Employment, and Income: Evidence on the Effects of Benefit Reductions from California," American Economic Review, American Economic Association, vol. 92(2), pages 380-384, May.
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