IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/24356.html
   My bibliography  Save this paper

Marriage, Labor Supply and the Dynamics of the Social Safety Net

Author

Listed:
  • Hamish Low
  • Costas Meghir
  • Luigi Pistaferri
  • Alessandra Voena

Abstract

The 1996 US welfare reform introduced limits on years of welfare receipt. We show that this reduced program participation, raised employment for single mothers, and reduced divorce. A limited commitment, lifecycle model of labor supply, marriage and divorce, estimated on pre-reform data, replicates these effects. A large part of the responses occur in anticipation of benefit exhaustion, impacting primarily women with low potential earnings. The reform reduces lifetime utility of women, even allowing for the government savings, but has negligible effects on men. The expectation of marriage attenuates the losses for women and an increased probability of single-motherhood raises them.

Suggested Citation

  • Hamish Low & Costas Meghir & Luigi Pistaferri & Alessandra Voena, 2018. "Marriage, Labor Supply and the Dynamics of the Social Safety Net," NBER Working Papers 24356, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24356
    Note: LS PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w24356.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
    2. Jeffrey E. Zabel, 1998. "An Analysis of Attrition in the Panel Study of Income Dynamics and the Survey of Income and Program Participation with an Application to a Model of Labor Market Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 33(2), pages 479-506.
    3. Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2016. "Female Labor Supply, Human Capital, and Welfare Reform," Econometrica, Econometric Society, vol. 84, pages 1705-1753, September.
    4. Marc K. Chan, 2013. "A Dynamic Model of Welfare Reform," Econometrica, Econometric Society, vol. 81(3), pages 941-1001, May.
    5. Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2000. "Mutual Insurance, Individual Savings and Limited Commitment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 216-246, April.
    6. Michael P. Keane & Kenneth I. Wolpin, 2010. "The Role Of Labor And Marriage Markets, Preference Heterogeneity, And The Welfare System In The Life Cycle Decisions Of Black, Hispanic, And White Women," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(3), pages 851-892, August.
    7. Marion Goussé & Nicolas Jacquemet & Jean‐Marc Robin, 2017. "Marriage, Labor Supply, and Home Production," Econometrica, Econometric Society, vol. 85(6), pages 1873-1919, November.
    8. Keane, Michael & Moffitt, Robert, 1998. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 553-589, August.
    9. Christopher A. Swann, 2005. "Welfare Reform When Recipients Are Forward-Looking," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    10. Orazio Attanasio & Hamish Low & Virginia Sánchez-Marcos, 2008. "Explaining Changes in Female Labor Supply in a Life-Cycle Model," American Economic Review, American Economic Association, vol. 98(4), pages 1517-1552, September.
    11. McFadden, Daniel, 1989. "A Method of Simulated Moments for Estimation of Discrete Response Models without Numerical Integration," Econometrica, Econometric Society, vol. 57(5), pages 995-1026, September.
    12. Attanasio, Orazio P & Weber, Guglielmo, 1995. "Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1121-1157, December.
    13. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 605-637.
    14. Maurizio Mazzocco, 2007. "Household Intertemporal Behaviour: A Collective Characterization and a Test of Commitment," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 857-895.
    15. Raquel Fernández & Joyce C. Wong, 2014. "Divorce Risk, Wages, and Working Wives: A Quantitative Life-Cycle Analysis of Female Labor Force Participation," NBER Working Papers 19869, National Bureau of Economic Research, Inc.
    16. Jeremy Lise & Ken Yamada, 2019. "Household Sharing and Commitment: Evidence from Panel Data on Individual Expenditures and Time Use," Review of Economic Studies, Oxford University Press, vol. 86(5), pages 2184-2219.
    17. Raquel Fernández & Joyce Cheng Wong, 2014. "Divorce Risk, Wages and Working Wives: A Quantitative Life‐Cycle Analysis of Female Labour Force Participation," Economic Journal, Royal Economic Society, vol. 0(576), pages 319-358, May.
    18. Petra Persson, 2020. "Social Insurance and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 128(1), pages 252-300.
    19. Shintaro Yamaguchi & Claudia Ruiz & Maurizio Mazzocco, 2014. "Labor Supply, Wealth Dynamics and Marriage Decisions," 2014 Meeting Papers 210, Society for Economic Dynamics.
    20. Raquel Fernández & Joyce Cheng Wong, 2017. "Free to Leave? A Welfare Analysis of Divorce Regimes," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(3), pages 72-115, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Salvador Ortigueira & Nawid Siassi, . "The U.S. Tax-Transfer System and Low-Income Households: Savings, Labor Supply, and Household Formation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    2. Naoki Aizawa & Chao Fu, 2020. "Interaction of the Labor Market and the Health Insurance System: Employer-Sponsored, Individual, and Public Insurance," NBER Working Papers 26713, National Bureau of Economic Research, Inc.
    3. Andrew Shephard, 2019. "Marriage market dynamics, gender, and the age gap," PIER Working Paper Archive 19-003, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    4. de Bresser, Jochem, 2019. "The Role of Heterogeneous Expectations in Life Cycle Models : Evaluating the Accuracy of Counterfactuals," Other publications TiSEM 25d04a47-1020-47eb-ba94-4, Tilburg University, School of Economics and Management.
    5. Salvador Ortigueira & Nawid Siassi, . "The U.S. Tax-Transfer System and Low-Income Households: Savings, Labor Supply, and Household Formation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    6. Fabio Blasutto, 2020. "Cohabitation vs Marriage: Mating Strategies by Education in the USA," LIDAM Discussion Papers IRES 2020023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Mark Colas & Dominik Sachs, 2020. "The Indirect Fiscal Benefits of Low-Skilled Immigration," CESifo Working Paper Series 8604, CESifo.
    8. Nishant Yonzan & Laxman Timilsina & Inas Rashad Kelly, 2020. "Economic Incentives Surrounding Fertility: Evidence from Alaska's Permanent Fund Dividend," NBER Working Papers 26712, National Bureau of Economic Research, Inc.
    9. Fabio Blasutto & Egor Kozlov, 2020. "(Changing) Marriage and Cohabitation Patterns in the US: do Divorce Laws Matter?," 2020 Papers pbl245, Job Market Papers.
    10. Gabrielle Pepin, 2020. "The Effects of Welfare Time Limits on Access to Financial Resources: Evidence from the 2010s," Upjohn Working Papers and Journal Articles 20-329, W.E. Upjohn Institute for Employment Research.
    11. Minsu Chang, 2019. "A House Without a Ring: The Role of Changing Marital Transitions for Housing Decisions," 2019 Meeting Papers 514, Society for Economic Dynamics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2016. "Female Labor Supply, Human Capital, and Welfare Reform," Econometrica, Econometric Society, vol. 84, pages 1705-1753, September.
    2. Doepke, M. & Tertilt, M., 2016. "Families in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1789-1891, Elsevier.
    3. Hassani Nezhad, Lena, 2020. "Female Employment and Childcare," IZA Discussion Papers 13839, Institute of Labor Economics (IZA).
    4. Jorge Rodriguez, 2017. "Understanding the Effects of Income and Child Care Subsidies on Children's Academic Achievement," 2017 Papers pro1077, Job Market Papers.
    5. Keane, Michael P. & Todd, Petra E. & Wolpin, Kenneth I., 2011. "The Structural Estimation of Behavioral Models: Discrete Choice Dynamic Programming Methods and Applications," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 4, pages 331-461, Elsevier.
    6. Mike Brewer & Monica Costa Dias & Jonathan Shaw, 2012. "Lifetime inequality and redistribution," IFS Working Papers W12/23, Institute for Fiscal Studies.
    7. Melanie Guldi & Lucie Schmidt, 2017. "Taxes, Transfers, and Women’s Labor Supply in the United States," Working Papers 2017-01, University of Central Florida, Department of Economics.
    8. THELOUDIS Alexandros, 2018. "Wages and Family Time Allocation," LISER Working Paper Series 2018-06, LISER.
    9. Groneck, Max & Wallenius, Johanna, 2017. "It Sucks to Be Single! Marital Status and Redistribution of Social Security," SSE Working Paper Series in Economics 2017:1, Stockholm School of Economics.
    10. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
    11. Orazio Attanasio & Peter Levell & Hamish Low & Virginia Sánchez-Marcos, 2015. "Aggregating Elasticities: Intensive and Extensive Margins of Female Labour Supply," NBER Working Papers 21315, National Bureau of Economic Research, Inc.
    12. Pierre-André Chiappori & Monica Costa Dias & Costas Meghir, 2018. "The Marriage Market, Labor Supply, and Education Choice," Journal of Political Economy, University of Chicago Press, vol. 126(S1), pages 26-72.
    13. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
    14. Elizabeth Caucutt & Nezih Guner & Christopher Rauh, 2018. "Is Marriage for White People? Incarceration, Unemployment, and the Racial Marriage Divide," Working Papers 2018-074, Human Capital and Economic Opportunity Working Group.
    15. Maria Rosaria Marino & Marzia Romanelli & Martino Tasso, 2016. "Women at work: the impact of welfare and fiscal policies in a dynamic labor supply model," Temi di discussione (Economic working papers) 1084, Bank of Italy, Economic Research and International Relations Area.
    16. Julien Albertini & Arthur Poirier & Anthony Terriau, 2020. "The impact of EITC on education, labor market trajectories, and inequalities," Working Papers 2036, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    17. Zvi Eckstein & Michael P. Keane & Osnat Lifshitz, 2016. "Sources of Change in the Life-Cycle Decisions of American Men and Women: 1962-2014," Economics Papers 2016-W07, Economics Group, Nuffield College, University of Oxford.
    18. Alessandra Voena, 2015. "Yours, Mine, and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," American Economic Review, American Economic Association, vol. 105(8), pages 2295-2332, August.
    19. Jochen Mankart & Rigas Oikonomou, 2017. "Household Search and the Aggregate Labour Market," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1735-1788.
    20. Jeremy Greenwood & Nezih Guner & Georgi Kocharkov & Cezar Santos, 2016. "Technology and the Changing Family: A Unified Model of Marriage, Divorce, Educational Attainment, and Married Female Labor-Force Participation," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(1), pages 1-41, January.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:24356. 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: . General contact details of provider: https://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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

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

    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.