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What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments

  • Bitler, Marianne P.

    ()

    (University of California, Irvine)

  • Gelbach, Jonah B.

    ()

    (Yale University)

  • Hoynes, Hilary W.

    ()

    (University of California, Berkeley)

Labor supply theory predicts systematic heterogeneity in the impact of recent welfare reforms on earnings, transfers, and income. Yet most welfare reform research focuses on mean impacts. We investigate the importance of heterogeneity using random-assignment data from Connecticut's Jobs First waiver, which features key elements of post-1996 welfare programs. Estimated quantile treatment effects exhibit the substantial heterogeneity predicted by labor supply theory. Thus mean impacts miss a great deal. Looking separately at samples of dropouts and other women does not improve the performance of mean impacts. We conclude that welfare reform's effects are likely both more varied and more extensive than has been recognized.

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File URL: http://ftp.iza.org/dp1728.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1728.

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Length: 49 pages
Date of creation: Aug 2005
Date of revision:
Publication status: published in: American Economic Review, 2006, 96 (4), 988–1012.
Handle: RePEc:iza:izadps:dp1728
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  1. Rajeev H. Dehejia, 2002. "Program evaluation as a decision problem," Discussion Papers 0102-23, Columbia University, Department of Economics.
  2. Bitler, Marianne P. & Gelbach, Jonah B. & Hoynes, Hilary W., 2005. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," IZA Discussion Papers 1728, Institute for the Study of Labor (IZA).
  3. Leora Friedberg, 2000. "The Labor Supply Effects of the Social Security Earnings Test," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 48-63, February.
  4. Terra McKinnish & Seth Sanders & Jeffrey Smith, 1999. "Estimates of Effective Guarantees and Tax Rates in the AFDC Program for the Post-OBRA Period," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 312-345.
  5. Abadie A., 2002. "Bootstrap Tests for Distributional Treatment Effects in Instrumental Variable Models," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 284-292, March.
  6. Gruber, Jonathan, 2000. "Cash welfare as a consumption smoothing mechanism for divorced mothers," Journal of Public Economics, Elsevier, vol. 75(2), pages 157-182, February.
  7. Neil G. Bennett & Hsien-Hen Lu & Younghwan Song, 2002. "Welfare Reform and Changes in the Economic Well-Being of Children," NBER Working Papers 9399, National Bureau of Economic Research, Inc.
  8. Schoeni, R.F. & Blank, R.M., 2000. "What Has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure," Papers 00-02, RAND - Labor and Population Program.
  9. Alberto Abadie & Joshua Angrist & Guido Imbens, 2002. "Instrumental Variables Estimates of the Effect of Subsidized Training on the Quantiles of Trainee Earnings," Econometrica, Econometric Society, vol. 70(1), pages 91-117, January.
  10. Rebecca M. Blank & David Card & Philip K. Robins, 1999. "Financial Incentives for Increasing Work and Income Among Low-Income Families," JCPR Working Papers 69, Northwestern University/University of Chicago Joint Center for Poverty Research.
  11. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-75, March.
  12. Jeff Grogger & Charles Michalopoulos, 1999. "Welfare Dynamics Under Time Limits," NBER Working Papers 7353, National Bureau of Economic Research, Inc.
  13. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-61, March.
  14. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2003. "Some Evidence on Race, Welfare Reform, and Household Income," American Economic Review, American Economic Association, vol. 93(2), pages 293-298, May.
  15. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  16. Moffitt, Robert A., 2002. "Welfare programs and labor supply," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 34, pages 2393-2430 Elsevier.
  17. 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.
  18. James J. Heckman & Jeffrey A. Smith, 1995. "Assessing the Case for Social Experiments," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 85-110, Spring.
  19. Keisuke Hirano & Guido W. Imbens & Geert Ridder, 2003. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," Econometrica, Econometric Society, vol. 71(4), pages 1161-1189, 07.
  20. Robert A. Moffitt, 1999. "The Effect of Pre-PRWORA Waivers on AFDC Caseloads and Female Earnings, Income, and Labor Force Behavior," JCPR Working Papers 89, Northwestern University/University of Chicago Joint Center for Poverty Research.
  21. Jeffrey Grogger, 2003. "The Effects of Time Limits, the EITC, and Other Policy Changes on Welfare Use, Work, and Income among Female-Headed Families," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 394-408, May.
  22. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc.
  23. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  24. Sergio Firpo, 2004. "Efficient Semiparametric Estimation of Quantile Treatment Effects," Econometric Society 2004 North American Summer Meetings 605, Econometric Society.
  25. Melvin Stephens Jr., 2003. ""3rd of tha Month": Do Social Security Recipients Smooth Consumption Between Checks?," American Economic Review, American Economic Association, vol. 93(1), pages 406-422, March.
  26. Jonathan Gruber, 1996. "Cash Welfare as a Consumption Smoothing Mechanism for Single Mothers," NBER Working Papers 5738, National Bureau of Economic Research, Inc.
  27. Heckman, James J & Smith, Jeffrey, 1997. "Making the Most Out of Programme Evaluations and Social Experiments: Accounting for Heterogeneity in Programme Impacts," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 487-535, October.
  28. Thomas Fraker & Robert Moffitt & Douglas Wolf, 1985. "Effective Tax Rates and Guarantees in the AFDC Program, 1967-1982," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 251-263.
  29. Hilary W. Hoynes & Kenneth Y. Chay & Dean Hyslop, 2004. "True State Dependence In Monthly Welfare Participation:A Nonexperimental Analysis," Working Papers 533, University of California, Davis, Department of Economics.
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