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Time-Inconsistency and Welfare Program Participation: Evidence from the NLSY

  • Hanming Fang
  • Dan Silverman

We empirically implement a dynamic structural model of labor supply and welfare program participation for never-married mothers with potentially time-inconsistent preferences. Using panel data on the choices of single women with children from the NLSY 1979, we provide estimates of the degree of time-inconsistency, and of its influence on the welfare take-up decision. With these estimates, we conduct counterfactual experiments to quantify the utility loss stemming from the inability to commit to future decisions, and the potential utility gains from commitment mechanisms such as welfare time limits and work requirements.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13375.

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Date of creation: Sep 2007
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Publication status: published as Hanming Fang & Dan Silverman, 2009. "Time-Inconsistency And Welfare Program Participation: Evidence From The Nlsy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(4), pages 1043-1077, November.
Handle: RePEc:nbr:nberwo:13375
Note: LS PE
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