Working Paper: NBER ID: w14038
Authors: Jordan D. Matsudaira; Rebecca M. Blank
Abstract: This paper investigates the impact of changes in earnings disregards for welfare assistance received by single mothers following welfare reform in 1996. Some states adopted much higher earnings disregards (women could work full time and still receive welfare), while other states did not. We explore the effect of these changes on women's labor supply and income using several data sources and multiple estimation strategies. Our results indicate these changes had little effect on labor supply or income. We show this is because few women used these earnings disregards. This is surprising and we discuss why this might occur.
Keywords: Earnings Disregards; Welfare Reform; Labor Supply; Income Effects
JEL Codes: H53; I38; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher earnings disregards (J31) | Labor supply (J22) |
| Higher earnings disregards (J31) | Income (D31) |
| Higher earnings disregards (J31) | Labor supply (low-skilled single mothers) (J22) |
| Higher earnings disregards (J31) | Income (low-skilled single mothers) (J31) |
| Higher earnings disregards (J31) | Use of earnings disregards (J31) |
| Use of earnings disregards (J31) | Welfare support (I38) |
| Higher earnings disregards (J31) | Leaving welfare (I38) |