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Behavioral Responses and Welfare Reform: Evidence from a Randomized Experiment

Author

Listed:
  • Hartley, Robert Paul

    () (Columbia University)

  • Lamarche, Carlos

    () (University of Kentucky)

Abstract

Recent studies have used a distributional analysis of welfare reform experiments suggesting that some individuals reduce hours in order to opt into welfare, an example of behavioral-induced participation. Using data on Connecticut's Jobs First experiment, we find no evidence of behavioral-induced participation at the highest conditional quantiles of earnings. We offer a simple explanation for this: women assigned to Jobs First incur welfare participation costs to labor supply at higher earnings where the control group is welfare ineligible. Moreover, as expected, behavioral components and costs of program participation do not seem to play a differential role at other conditional quantiles where both groups are eligible to participate. Our findings show that a welfare program imposes an estimated cost up to 10 percent of quarterly earnings, and these costs can be heterogeneous throughout the conditional earnings distribution. The evidence is obtained by employing a semi-parametric panel quantile estimator for a model that allows women to vary arbitrarily in preferences and costs of participating in welfare programs.

Suggested Citation

  • Hartley, Robert Paul & Lamarche, Carlos, 2017. "Behavioral Responses and Welfare Reform: Evidence from a Randomized Experiment," IZA Discussion Papers 10905, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10905
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    References listed on IDEAS

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    More about this item

    Keywords

    welfare reform; quantile regression; panel data; program participation;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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