IDEAS home Printed from https://ideas.repec.org/p/don/donwpa/008.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: ftp://ftp.dondena.unibocconi.it/WorkingPapers/Dondena_WP008.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    2. Bruce D. Meyer & Dan T. Rosenbaum, 2001. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 1063-1114.
    3. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    4. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2005. "Work and Leisure in the U. S. and Europe: Why so Different?," Harvard Institute of Economic Research Working Papers 2068, Harvard - Institute of Economic Research.
    5. 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.
    6. Robert A. Moffitt, 2003. "The Temporary Assistance for Needy Families Program," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 291-364, National Bureau of Economic Research, Inc.
    7. Michalopoulos, Charles & Robins, Philip K. & Card, David, 2005. "When financial work incentives pay for themselves: evidence from a randomized social experiment for welfare recipients," Journal of Public Economics, Elsevier, vol. 89(1), pages 5-29, January.
    8. Christopher A. Swann, 2005. "Welfare Reform When Recipients Are Forward-Looking," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    9. Randi Kjeldstad & Marit Rønsen, 2004. "Welfare Rules, Business Cycles, And Employment Dynamics Among Lone Parents In Norway," Feminist Economics, Taylor & Francis Journals, vol. 10(2), pages 61-89.
    10. Arnstein Aassve & Gianni Betti & Stefano Mazzuco & Letizia Mencarini, 2007. "Marital disruption and economic well‐being: a comparative analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 170(3), pages 781-799, July.
    11. David Card & Dean R. Hyslop, 2006. "The Dynamic Effects of an Earnings Subsidy for Long-Term Welfare Recipients: Evidence from the SSP Applicant Experiment," NBER Working Papers 12774, National Bureau of Economic Research, Inc.
    12. Roed, Knut & Zhang, Tao, 2005. "Unemployment duration and economic incentives--a quasi random-assignment approach," European Economic Review, Elsevier, vol. 49(7), pages 1799-1825, October.
    13. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
    14. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 605-637.
    15. Conny Olovsson, 2009. "Why Do Europeans Work So Little?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 39-61, February.
    16. Jeffrey Grogger & Charles Michalopoulos, 2003. "Welfare Dynamics under Time Limits," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 530-554, June.
    17. Ghazala Naz, 2004. "The impact of cash-benefit reform on parents’ labour force participation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 369-383, June.
    18. Richard Burkhauser & Greg Duncan & Richard Hauser & Roland Berntsen, 1991. "Wife or frau, women do worse: A comparison of men and women in the United States and Germany after marital dissolution," Demography, Springer;Population Association of America (PAA), vol. 28(3), pages 353-360, August.
    19. Marco Francesconi & Wilbert van der Klaauw, 2007. "The Socioeconomic Consequences of "In-Work" Benefit Reform for British Lone Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
    20. Mike Brewer & Marco Francesconi & Paul Gregg & Jeffrey Grogger, 2009. "Feature: In‐work Benefit Reform in a Cross‐National Perspective ‐ Introduction," Economic Journal, Royal Economic Society, vol. 119(535), pages 1-14, February.
    21. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    22. 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.
    23. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    24. John F. Ermisch & Robert E. Wright, 1991. "Welfare Benefits and Lone Parents' Employment in Great Britain," Journal of Human Resources, University of Wisconsin Press, vol. 26(3), pages 424-456.
    25. Bruce D. Meyer & James X. Sullivan, 2008. "Changes in the Consumption, Income, and Well-Being of Single Mother Headed Families," American Economic Review, American Economic Association, vol. 98(5), pages 2221-2241, December.
    26. Bitler, Marianne P. & Gelbach, Jonah B. & Hoynes, Hilary W., 2008. "Distributional impacts of the Self-Sufficiency Project," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 748-765, April.
    27. Unknown, 2005. "Forward," 2005 Conference: Slovenia in the EU - Challenges for Agriculture, Food Science and Rural Affairs, November 10-11, 2005, Moravske Toplice, Slovenia 183804, Slovenian Association of Agricultural Economists (DAES).
    28. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
    29. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
    30. Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May.
    31. Knut R¯ed & Oddbj¯rn Raaum, 2003. "Administrative registers - Unexplored reservoirs of Scientific Knowledge?," Economic Journal, Royal Economic Society, vol. 113(488), pages 258-281, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kory Kroft & Kavan Kucko & Etienne Lehmann & Johannes Schmieder, 2020. "Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach," American Economic Journal: Economic Policy, American Economic Association, vol. 12(1), pages 254-292, February.
    2. 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.
    3. Vedeler Johnsen, Julian & Holm Reiso, Katrine, 2017. "Economic Impacts of Workfare Reforms for Single Mothers: Benefit Substitution and Labour supply responses," Working Papers in Economics 4/17, University of Bergen, Department of Economics.
    4. Chiara Daniela Pronzato, 2015. "Fighting Lone Mothers’ Poverty Through In-Work Benefits: Methodological Issues and Policy Suggestions," CESifo Economic Studies, CESifo Group, vol. 61(1), pages 95-122.
    5. Chiara Daniela Pronzato, 2014. "Fighting Lone Mothers’ Poverty through In-Work Benefits. Methodological Issues and Policy Suggestions," CHILD Working Papers Series 23, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    6. 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 of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Magne Mogstad & Chiara Pronzato, 2012. "Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1129-1159, December.
    2. Mazzolari, Francesca & Ragusa, Giuseppe, 2012. "Time Limits: The Effects on Welfare Use and Other Consumption-Smoothing Mechanisms," IZA Discussion Papers 6993, Institute of Labor Economics (IZA).
    3. Bitler, Marianne P. & Gelbach, Jonah B. & Hoynes, Hilary W., 2008. "Distributional impacts of the Self-Sufficiency Project," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 748-765, April.
    4. Melanie Guldi & Lucie Schmidt, 2017. "Taxes, Transfers, and Women’s Labor Supply in the United States," Working Papers 2017-01, University of Central Florida, Department of Economics.
    5. Sánchez-Mangas, Rocio & Sánchez-Marcos, Virginia, 2008. "Balancing family and work: The effect of cash benefits for working mothers," Labour Economics, Elsevier, vol. 15(6), pages 1127-1142, December.
    6. Bettendorf, Leon J.H. & Folmer, Kees & Jongen, Egbert L.W., 2014. "The dog that did not bark: The EITC for single mothers in the Netherlands," Journal of Public Economics, Elsevier, vol. 119(C), pages 49-60.
    7. Gabrielle Pepin, 2022. "The effects of welfare time limits on access to financial resources: Evidence from the 2010s," Southern Economic Journal, John Wiley & Sons, vol. 88(4), pages 1343-1372, April.
    8. Asai, Yukiko, 2015. "Parental leave reforms and the employment of new mothers: Quasi-experimental evidence from Japan," Labour Economics, Elsevier, vol. 36(C), pages 72-83.
    9. Richard Blundell & Mike Brewer & Marco Francesconi, 2008. "Job Changes and Hours Changes: Understanding the Path of Labor Supply Adjustment," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 421-453, July.
    10. V. Joseph Hotz, 2003. "The Earned Income Tax Credit," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 141-198, National Bureau of Economic Research, Inc.
    11. Marc K Chan, 2014. "Measuring the Dynamic Effects of Welfare Time Limits," Working Paper Series 23, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    12. Fabrizio Colonna & Stefania Marcassa, 2015. "Taxation and female labor supply in Italy," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.
    13. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
    14. Rolf Aaberge & Ugo Colombino, 2014. "Labour Supply Models," Contributions to Economic Analysis, in: Handbook of Microsimulation Modelling, volume 127, pages 167-221, Emerald Group Publishing Limited.
    15. Aaberge, Rolf & Flood, Lennart, 2013. "U.S. versus Sweden: The Effect of Alternative In-Work Tax Credit Policies on Labour Supply of Single Mothers," IZA Discussion Papers 7706, Institute of Labor Economics (IZA).
    16. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    17. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
    18. Marc K. Chan, 2017. "Welfare Dependence and Self-Control: An Empirical Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(4), pages 1379-1423.
    19. Ciani Emanuele & Fisher Paul, 2019. "Dif-in-Dif Estimators of Multiplicative Treatment Effects," Journal of Econometric Methods, De Gruyter, vol. 8(1), pages 1-10, January.
    20. Wolfgang Ochel, 2004. "Welfare Time Limits in the United States – Experiences with a New Welfare-to-Work Approach," CESifo Working Paper Series 1210, CESifo.

    More about this item

    Keywords

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

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:don:donwpa:008. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Amy Johnson (email available below). General contact details of provider: http://www.dondena.unibocconi.it/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.