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The Effect of Welfare Reforms on Benefit Substitution

  • Reiso, Katrine Holm

    ()

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

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    Policy-makers have confronted welfare dependence and poverty among single mothers by imposing work requirements and time limits on the receipt of welfare benefits. Reforms with such features have generally reduced programme case-loads and increased the employment and earnings of single mothers. There is little evidence, however, on the amount of benefit substitution associated with such reforms. In this paper, we test whether reductions in welfare dependence may be offset by increased participation in other benefit programmes. Evaluating the restrictive reforms of the welfare programme for single mothers in Norway, we find evidence of considerable benefit substitution. Hence, decreases in programme case-loads do not reflect equal reductions in welfare dependence.

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    File URL: http://brage.bibsys.no/xmlui/bitstream/handle/11250/196300/1/workingpaper.pdf
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    Paper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 22/2014.

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    Length: 43 pages
    Date of creation: 30 Jun 2014
    Date of revision:
    Handle: RePEc:hhs:nhheco:2014_022
    Contact details of provider: Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
    Phone: +47 55 959 277
    Fax: 5595 9100
    Web page: http://www.nhh.no/sam/
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    1. Karlström, Anders & Palme, Mårten & Svensson, Ingemar, 2008. "The Employment Effect of Stricter Rules for Eligibility for DI: Evidence from a Natural Experiment in Sweden," Research Papers in Economics 2008:3, Stockholm University, Department of Economics.
    2. 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.
    3. Lukas Inderbitzin & Stefan Staubli & Josef Zweimüller, 2013. "Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution," NRN working papers 2013-04, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    4. Ghazala Naz, 2004. "The impact of cash-benefit reform on parents’ labour force participation," Journal of Population Economics, Springer, vol. 17(2), pages 369-383, 06.
    5. Lucie Schmidt & Purvi Sevak, 2004. "AFDC, SSI, and Welfare Reform Aggressiveness: Caseload Reductions versus Caseload Shifting," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
    6. 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.
    7. Lammers, Marloes & Bloemen, Hans & Hochguertel, Stefan, 2013. "Job search requirements for older unemployed: Transitions to employment, early retirement and disability benefits," European Economic Review, Elsevier, vol. 58(C), pages 31-57.
    8. 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.
    9. Nina Drange & Mari Rege, 2012. "Trapped at Home: The Effect of Mothers' Temporary Labor Market Exits on their Subsequent Work Career," CESifo Working Paper Series 3833, CESifo Group Munich.
    10. 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.
    11. Bowen Garrett & Sherry Glied, 2000. "Does state AFDC generosity affect child SSI participation?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(2), pages 275-295.
    12. Lucie Schmidt & Purvi Sevak, 2000. "AFDC, SSI, and Welfare Reform Aggressiveness: Caseload Reductions vs. Caseload Shifting," Department of Economics Working Papers 2002-03, Department of Economics, Williams College.
    13. 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).
    14. Eissa, Nada & Liebman, Jeffrey B, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 605-37, May.
    15. Henningsen, Morten, 2008. "Benefit shifting: The case of sickness insurance for the unemployed," Labour Economics, Elsevier, vol. 15(6), pages 1238-1269, December.
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