Incentives and the Work Decisions of Welfare Recipients

American Journal of Economics and Sociology, The,  July, 2000  by Kevin Duncan

• E-mail
• Print
• Link

(5.) For ease of presentation the numerical example assumes that the "30 and one third" exemption expires in four months. In fact, OBRA limited the "30" exemption to eight months and the "one third" disregard to four months. After these periods the implicit "tax" applies to all income. See Nightengale and Burbridge (1987) for a discussion of changes under OBRA.

(6.) Data in Table 2 reports the percentage distribution (by category and year) of the PSID subsample of welfare participants. An individual who participated in AFDC at some time over the 1980-1987 period could have received income from working (without welfare) mixing welfare and work, or received only AFDC.

(7.) Shiller and Brasher (1993) find that the adoption of workfare policies by states after 1982 had the effect of reducing welfare use.

(8.) The logit equations also include the square of Years AFDC and year dummy variables. The averages of these variables are not reported in Table 3.

(9.) Years of AFDC is derived by summing the number of years that a respondent received at least $1.00 of AFDC. Since we do not use the PSID prior to 1980, we do not include information on assistance prior to 1980, consequently if those who received assistance tend to have a long history (more than eight years) of welfare, the analysis will overstate the effect of another year of AFDC on the odds ratios. This problem is unavoidable for even if the PSID was used from its inception (1968) we would still not be able to measure the welfare experience of individuals whose activity precedes 1968.

(10.) See Moffit (1983) for a discussion of welfare stigma.

(11.) The coefficient and t-value (in parentheses) for the interaction term between Real Wage and Years AFDC is reported below:

[delta](Prob. Work)/[delta](Prob. Mix) = .140 - .011 Years AFDC (2.28) (- .69)

(12.) The coefficient and t-value (in parentheses) for the interaction term between Real Wage and Years AFDC is reported below:

[delta](Prob.AFDC)/[delta](Prob. Mix) .0004 - .0001 Years AFDC (5.45) (-3.13)

References

Bane, M. and D. Ellwood, The Dynamics of Dependence: The Routes to Self-Sufficiency. Washington, DC(1983): Department of Health and Human Services.

Blank, E. and P. Ruggles, "Short-Term Recidivism Among Public Assistance Recipients", American Economic Review 84 (1994): 49- 53.

Boskin, M. and F. Nold, "A Markov Model of Turnover in Aid to Families with Dependent Children", Journal of Human Resources 10 (1975): 467-81.

Ermisch, J. and R. Wright, "Welfare Benefits and Lone Parents' Employment in Great Britain", Journal of Human Resources 26 (1991): 424-56.

Gardner, J. and D. Herz," Working Poor in 1990", Monthly Labor Review (December, 1992): 20-27.

Harrison, B., "How American Households Mix Work and Welfare", Challenge 21 (1978): 49-54.

-----, Education, Training and the Urban Ghetto. Baltimore: (John Hopkins University, 1972).

Hutchens, R., "Entry and Exit Transitions in Government Transfer Program: The Case of Aid to Families with Dependent Children", Journal of Human Resources 16 (1981): 317-37.