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Are We Understating the Impact of Economic Conditions on Welfare Rolls?


  • Dan A. Black
  • Terra G. McKinnish

    (Department of Economics, University of Colorado)

  • Seth G.Sanders

    (Department of Economics, University of Maryland)


In this brief we argue that welfare participation is more sensitive to economic conditions than previously believed. Why? Prior research focused on short-term economic fluctuations and ignored differences between high- and low-skilled workers. As welfare is long-term (i.e., permanent) it makes more sense to make comparisons with long-term economic trends. Also, since low-skilled workers are more likely to end up on welfare, it is proper to focus on their economic opportunities. Thus, we focus on the long-term impact of economic conditions on welfare participation, and we concentrate our analysis on low-skilled workers. Specifically, we analyze long-term changes in the supply of high-paying jobs for coal and steel workers as they affect certain heavy coal- and steel-producing regions of the United States during the 1970s and 1980s. Our findings indicate that welfare participation in these regions closely mirrors the long-term local availability of high-paying jobs for low-skilled workers. This has serious policy implications for the long-term success of welfare reform.

Suggested Citation

  • Dan A. Black & Terra G. McKinnish & Seth G.Sanders, 2000. "Are We Understating the Impact of Economic Conditions on Welfare Rolls?," Center for Policy Research Policy Briefs 18, Center for Policy Research, Maxwell School, Syracuse University.
  • Handle: RePEc:max:cprpbr:18

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    References listed on IDEAS

    1. 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, Oxford University Press, vol. 116(3), pages 1063-1114.
    2. Stacy Dickert & Scott Houser & John Karl Scholz, 1995. "The Earned Income Tax Credit and Transfer Programs: A Study of Labor Market and Program Participation," NBER Chapters,in: Tax Policy and the Economy, Volume 9, pages 1-50 National Bureau of Economic Research, Inc.
    3. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    4. Carrington, William J & Zaman, Asad, 1994. "Interindustry Variation in the Costs of Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 243-275, April.
    5. Timothy J. Bartik & Randall W. Eberts, 199. "Examining the Effect of Industry Trends and Structure on Welfare Caseloads," Book chapters authored by Upjohn Institute researchers,in: Sheldon H. Danziger (ed.), Economic Conditions and Welfare Reform, chapter 5, pages 119-157 W.E. Upjohn Institute for Employment Research.
    6. 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.
    7. Rebecca M. Blank, 2001. "What Causes Public Assistance Caseloads to Grow?," Journal of Human Resources, University of Wisconsin Press, vol. 36(1), pages 85-118.
    8. Rebecca M. Blank, 1999. "What Goes Up Must Come Down? Explaining Recent Changes in Public Assistance Caseloads," JCPR Working Papers 78, Northwestern University/University of Chicago Joint Center for Poverty Research.
    9. John M. Fitzgerald, 1995. "Local labor markets and local area effects on welfare duration," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(1), pages 43-67.
    10. David N. Figlio & James P. Ziliak, 1999. "Welfare Reform, the Business Cycle, and the Decline in AFDC Caseloads," JCPR Working Papers 77, Northwestern University/University of Chicago Joint Center for Poverty Research.
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    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings


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