I would like to thank Robert Moffitt for providing the data and answering numerous questions. I have benefited from coments by Hank Farber, Jerry Hausman, Larry Katz, Dale Mortensen, Glenn Sueyoshi and seminar participants at Chicago, MIT, Minnesota, Northwestern, and the NBER Labor Studies Group. The Sloan Foundation provided financial support. The research reported here is part of the NBERs research program in Labor Studies. Any opinions expressed are those of the author and not those of the National Bureau of Economic Research.

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During 1984-96, welfare and tax policy changed dramatically. The Earned Income Tax Credit was expanded, welfare benefits were cut, welfare time limits were added and cases were terminated, Medicaid for the working poor was expanded, training programs were redirected, and subsidized or free child care was expanded. Many of the program changes were intended to encourage low income women to work.During this same time period there were unprecedented increases in the employment and hours of single mothers, particularly those with young children. In this paper, we first document these large changes in policies and employment. We then examine if the policy changes are the reason for the large increases in single mothers' labor supply. We find evidence that a large share of the increase in work by single mothers can be attributed to the EITC, with smaller shares for welfare benefit reductions, welfare waivers, changes in training programs, and child care expansions. We also find that most of these policies increased hours worked. Our results indicate that financial incentives through the tax and welfare systems have substantial effects on single mothers' labor supply decisions.The only paper which directly examines how the EITC affects single mothers' labor supply is Eissa and Liebman (1996), which examines the effect of the Tax Reform Act of 1986. 1 In his discussion of the labor supply effects of Medicaid, Moffitt (1992) argues that there has been too little work to draw reliable conclusions. 2 Moffitt describes the labor supply effect of Aid to Families with Dependent Children (AFDC) as being subject to considerable uncertainty and notes that the broader labor supply literature has examined single mothers "only rarely." 3 Dickert, Houser, and Scholz (1995) argue that this literature provides little guidance as to how the EITC will affect labor market participation, and that this omission is especially important because past work indicates that most of the labor supply response is in the work decision rather than the hours decision. Furthermore, there is no work that we are aware of that assesses the overall effect of recent changes in training and child care programs. 4 The work on the effects of welfare waivers has examined program caseloads rather than employment, and has reached conflicting results. 5Second, these changes in policies provide a plausible source of exogenous variation with which to identify the effects of tax and welfare parameters on labor supply. The magnitudes of these effects are key determinants of the gains or losses from changes in income redistribution and social insurance policies. The variation in the after-tax and transfer return to work that we use here to identify labor 3 supply elasticities is due to large changes in federal and state laws. These laws applied to some individuals and not to others, or had differential effects on the incentives of different people. This source of variation is likely to be unrelated to underlying differences across individuals in their desire to work, a...

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. University of Wisconsin Press andThe Board of Regents of the University of Wisconsin System are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Human Resources. ABSTRACT We show that self-employment rates differ substantially across 60 ethnic and racial groups in the United States. These differences exist within broad combinations of groups such as Asians and Hispanics, and are almost as great after regression controls, including age, education, immigrant status, and time in the country. We then provide evidence on a number of theories of self-employment. An ethnic/racial group's selfemployment rate is positively associated with the difference between average self-employment and wage/salary earnings for that group. Ethnic/ racial groups that emigrate from countries with high self-employment rates do not have high self-employment rates in the United States. Finally, we find that the more advantaged ethnic/racial groups, measured by wage/salary earnings, self-employment earnings, and unearned income, and not the more disadvantaged groups, have the highest selfemployment rates. Robert W. Fairlie is an assistant professor of economics at the University of California, Santa Cruz. Bruce D. Meyer is a professsor of economics and a faculty fellow at the Center for Urban Affairs and Policy Research at Northwestern University. The authors would like to thank Wayne Atkins for help with the early stages of this project, All use subject to JSTOR Terms and Conditions 758 The Journal of Human Resources employed African-American women work for themselves. In contrast, Korean-American men and women have self-employment rates of 27.9 percent and 18.9 percent, respectively. While there are many good studies of a few groups, there is little evidence on these differences from nationally representative surveys that allow cross-group comparisons with comparable data. In this paper, we document the enormous differences in self-employment rates across a large number of ethnic/racial groups. In addition, we examine many of the possible explanations for these differences.Understanding the ethnic/racial character of self-employment is important for at least two reasons. First, conflicts between ethnic and racial groups in the United States have often been aggravated by business ownership patterns. The racial conflict between Koreans and African-Americans in many large cities, in large part due to the presence of Korean-owned businesses in black communities, is just the latest example. Second, self-employment has historically been a route of economic advancement for some ethnic groups.2 The success of Chinese and Japanese immigrants in the United States is substantially ...

Recently, there has been extensive experimental evaluation of reforms of the unemployment insurance (UI) system. The UI experiments can be divided into two main areas: reemployment bonuses and job search programs. The four reemployment bonus experiments offered payments to UI recipients who found jobs quickly and kept them for a specified period of time. The six job search experiments evaluated combinations of services including additional information on job openings, more job placements, and more extensive checks of UI eligibility.The bonus experiments show that economic incentives do affect the speed with which people leave the unemployment insurance rolls. They also show that speeding claimants' return to work appears to increase total earnings following the claim, but the evidence is less strong. They also suggest that the rate of pay on the new job is not adversely affected by an earlier return to work.Despite these encouraging results, I argue that the experiments do not show that permanent adoption of a reemployment bonus would be beneficial as they cannot account for the effect of a reemployment bonus on the size of the claimant population.The job search experiments test several reforms that appear more promising. Nearly all of the combinations of services and increased enforcement reduce UI receipt, and have benefits that exceed Costs. The treatments which mainly increase enforcement of work search rules have small but often statistically significant effects. The experiments which focus more on providing services induce much larger reductions in UI receipt, but at a higher cost of services per claimant, Nevertheless, these experiments have very favorable ratios of benefits to costs.