IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/2026.html
   My bibliography  Save this paper

How Important is Welfare Dependence?

Author

Listed:
  • Rebecca M. Blank

Abstract

This paper develops a theoretical model of welfare dependence, in which current participation in AFDC induces greater future use of the program. One prediction is duration dependence in welfare spells. This is tested using 6 years of monthly data on time spent in the AFDC program among female household heads in the control group of the Seattle/Denver Income Maintenance Experiment. A variety of duration dependence models are estimated, investigating the effect of different functional form assumptions, as well as the impact of accounting for time-varying covariates, competing risks, and data heterogeneity in the estimates. Monthly AFDC participation does not show strong evidence of duration dependence. In fact, during the initial months on the program the probability of leaving the program, conditional on past participation, appears to be flat or increasing. After about eight months the probability of leaving starts to decrease, but it becomes virtually flat after 18 to 24 months. There is some indication that there are two distinct groups that utilize welfare: one group, which has a very low probability of leaving welfare and whose rate of exit changes little over time; and a second group, which is more affected by time on the program. The propensity of black women to experience longer AFDC spells appears totally due to their lower probability of leaving AFDC via marriage, rather than any difference in leaving via earnings or other income increases. However, even where duration dependence is present in the data, this is not adequate evidence for program-induced welfare dependence. The final part of the paper presents a model of earnings change and AFDC participation which contains no welfare dependence effects. Welfare spells simulated from this model show duration dependence effects which appear quite similar to those observed in the actual data.

Suggested Citation

  • Rebecca M. Blank, 1986. "How Important is Welfare Dependence?," NBER Working Papers 2026, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2026
    Note: LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w2026.pdf
    Download Restriction: no

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2026. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.