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Displacement and Wage Effects of Welfare Reform


  • Timothy J. Bartik


In this paper, I consider the displacement and wage effects of welfare reform. Recent welfare reforms are pushing welfare recipients into the labor market. Will jobs obtained by ex-welfare recipients come at the expense of others, who will be "displaced" by losing jobs or having fewer job vacancies available? Will the increased labor supply of welfare recipients stimulate job creation? Will the increased labor supply of welfare recipients depress wages overall, or for women with little education? To address these questions, in this paper I will: provide estimates of how welfare reform will affect labor supply; discuss the forces influencing displacement and wage effects of welfare reform; review previous estimates of wage effects that will occur because of welfare reform; provide new simulations, using several methodologies and estimates, of the displacement and wage effects that will occur because of welfare reform. explore what we can see so far about the labor market effects of welfare reform.

Suggested Citation

  • Timothy J. Bartik, 1999. "Displacement and Wage Effects of Welfare Reform," JCPR Working Papers 66, Northwestern University/University of Chicago Joint Center for Poverty Research.
  • Handle: RePEc:wop:jopovw:66
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    Cited by:

    1. Darren Lubotsky, 2004. "The Labor Market Effects of Welfare Reform," ILR Review, Cornell University, ILR School, vol. 57(2), pages 249-266, January.
    2. Rebecca M. Blank, 2001. "Declining caseloads/increased work: what can we conclude about the effects of welfare reform?," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 25-36.
    3. Charness, Gary & Levine, David I., 2002. "Changes in the employment contract?: Evidence from a quasi-experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 47(4), pages 391-405, April.
    4. Kaestner, Robert & Kaushal, Neeraj & Van Ryzin, Gregg, 2003. "Migration consequences of welfare reform," Journal of Urban Economics, Elsevier, vol. 53(3), pages 357-376, May.
    5. Peter B. Dixon & Maureen T. Rimmer, 2005. "The Displacement Effect of Labour-Market Programs: Estimates from the MONASH Model," Centre of Policy Studies/IMPACT Centre Working Papers g-154, Victoria University, Centre of Policy Studies/IMPACT Centre.
    6. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
    7. Olugbenga Ajilore, 2012. "Did the Work Opportunity Tax Credit Cause Subsidized Worker Substitution?," Economic Development Quarterly, , vol. 26(3), pages 231-237, August.
    8. Divounguy Nding, Orphe, 2015. "Welfare Spending in the Long Run," MPRA Paper 68446, University Library of Munich, Germany.
    9. Peter B. Dixon & Maureen T. Rimmer, 2006. "The Displacement Effect of LabourÔÇÉMarket Programs: MONASH Analysis," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages 26-40, September.
    10. Randy Albelda, 2001. "Fallacies of Welfare-to-Work Policies," The ANNALS of the American Academy of Political and Social Science, , vol. 577(1), pages 66-78, September.

    More about this item

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs


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