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This paper has been concerned with the reduced-form adjusted correlations between the marital status of men and women in the United States and measures of the generosity of the welfare system

The effect of the U.S. welfare system on marital status.

JOURNAL OF PUBLIC ECONOMICS, no. 1 (1990): 101-124

Cited by: 71|Views7
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Abstract

"An issue of long-standing importance in the U.S. welfare system has been its lack of neutrality with respect to family composition, which generally provides payments only to female-headed families--that is, families with no able-bodied male present. Using data from 1969 to 1985 to examine the issue, this study finds that (1) the simple c...More

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Introduction
  • Research on the economic effects of the U.S welfare system on individual behavior has over a twenty-year history but has been undergoing a significant evolution in the last few years.
  • The most important policy issue in this literature has always been the potential work-inducing effects of lowering the tax rate, called the ‘benefit-reduction rate’, in such programs
  • This line of attack has for the most part played itself out, perhaps through sheer exhaustion, and because it is widely agreed by both economists and government officials that manipulation of the tax rate is likely to have little significant positive impact on labor supply, if not a negative impact [see the recent review of this literature by Moffitt (1987a)].
Highlights
  • Research on the economic effects of the U.S welfare system on individual behavior has over a twenty-year history but has been undergoing a significant evolution in the last few years
  • This paper has been concerned with the reduced-form adjusted correlations between the marital status of men and women in the United States and measures of the generosity of the welfare system
  • (1) The crosssectional estimate of the effect of welfare payments on marital status and female headship appears to have grown over time for both women and men
  • MofJtt, U.S welfare system and marital status headship appears in the results, rarely attaining conventional significance levels
  • (3) In 1985, the estimates for female headship are significant and those for marital status of women are negative in sign but not significant
Results
  • The 70 percent reduction is applied because Food Stamp benefits are reduced by 30 percent of the AFDC benefit, and the 36.8 percent reduction is applied to adjust Medicaid to a cash-equivalent value [see Smeeding (1982)].
Conclusion
  • This paper has been concerned with the reduced-form adjusted correlations between the marital status of men and women in the United States and measures of the generosity of the welfare system
  • This issue has been examined before, several new findings have emerged.
  • (1) The crosssectional estimate of the effect of welfare payments on marital status and female headship appears to have grown over time for both women and men.
  • An obvious potential explanation is that there are sufficiently long lags in the response of marital behavior to the welfare system that it takes several years for its effect to show up
Tables
  • Table1: Means of the variables used in the analysis
  • Table2: Means of the state benefit variables.”
  • Table3: Probit estimates of white female marital-status equations, 1985
  • Table4: Probit estimates for white females across time
  • Table5: Probit coefficients on benefit sum for other subgroups
  • Table6: Probit coefficients on benefit sum in subsamples.”
  • Table7: Probit coefficients on benefit-sum female-headship equationsa
Download tables as Excel
Funding
  • This research was partially supported by a grant from the U.S Department of Health and Human Services to the Institute for Research on Poverty at the University of Wisconsin
Study subjects and analysis
subgroups - white females: 4
For each CPS, all individuals aged 1655 are selected. Separate estimates are provided for four subgroups - white females, black females, white males, and black males. To keep sample sizes to manageable proportions the two white subgroups are subsampled down to approximately 5,000

Reference
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  • Deaton, A., 1985, Panel data from time series of cross sections, Journal of Econometrics 30, 109-126.
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  • Ellwood, D. and M. Bane, 1985, The impact of AFDC on family structure and living arrangements, in: R. Ehrenberg, ed., Research in labor economics, Vol. 7 (JAI Press, Greenwich, CT). Fitzgerald, J., 1988, The effect of the marriage market and AFDC benefits on recipient duration on AFDC, Paper presented at the 1988 Meetings of the Population Association of America, New Orleans, April.
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  • MoIIitt, R., 1987a, Work and the U.S. welfare system, A review, Mimeo. (Brown University, Providence, RI). Mofftt, R., 1987b, Has state redistribution policy grown more conservative? Mimeo. (Brown University, Providence, RI). MofIitt, R., 1988, Estimating dynamic models with a time series of repeated cross sections, Mimeo. (Brown University, Providence, RI). Smeeding, T., 1982, Alternative methods for valuing selected in-kind transfer benefits and measuring their effect on poverty, Technical Paper 50 (Bureau of the Census, Washington, DC). Topel, R., 1983, On layoffs and unemployment insurance, American Economic Review 83, 541-559.
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