Regional welfare program and labour force participation

Abstract

Welfare program dependency and expenditures rise during recessions, while income tax revenues from working people fall. Thus, now that states are responsible for their own welfare programs, they need to know how responsive their citizens are to workplace and safety net opportunities. This paper investigates household welfare program and labor force participation behavior. A choice-theoretic model is developed and estimated for each of the four census regions (Northeast, Midwest, South, and West) using cross-sectional data on households, labor markets, and policies. We show that household responses to welfare program parameters do differ regionally. But we find that labor supply does not depend on welfare program participation or program payoffs. Furthermore, unlike under the previous welfare program, participation in Temporary Assistance for Needy Families (TANF) does not significantly reduce household labor supply. The finding of significant differences across regions justifies the efficiency rationale for the devolution of authority to the states. We also discuss how states may be able to contain expenditures on welfare programs. supply. The finding of significant differences across regions justifies the efficiency rationale for the devolution of authority to the states. We also discuss how states may be able to contain expenditures on welfare programs.

Do Immigrant Groups Differ in Welfare Usage? Evidence from the U.S.

“…There are also several papers that showed economic agents-whether natives or immigrants-respond to differences in welfare benefits across location and time. This response to differences in welfare benefits across states has led to the classification of some states as magnet states for immigrants (Zavodny 1997;Huffman and Kilkenny 2003).…”

Have Dutch Municipalities Become More Efficient in Managing the Costs of Social Assistance Dependency?*

“…See Danielson and Klerman (2008), Wallace (2007), Klerman and Haider (2004), Blank (2002), and Bell (2001). Huffman and Kilkenny (2007) analyzed the regional variation of the new Temporary Assistance to Needy Families (TANF) program that each state has to develop under PRWORA. They find very little evidence that household behavior with respect to TANF instruments varies across regions in the U.S.…”

The Food Stamps Program and Economic Security Among Low‐Income Families, Part I

“…For others with employment, however, the decision may be more complicated as it likely causes distortions in labor supply and earnings and affects their eligibility for other cash and non‐cash welfare supports. Yet, while the “income‐enhancing” effect of Food Stamps may not be large enough to entirely shun employment, studies have shown that the availability and amount of FSP supports significantly affect labor supply (Blank, ; Fording & Berry, ; Huffman & Jensen, , ; Huffman & Kilkenny, ; Moffitt, ). This potential “work‐disincentive” effect can be more important when FSP participants qualify for other forms of cash assistance, including TANF and EITC, that increase their effective marginal tax rates and reduce labor supply (Meyer & Rosenbaum, ; Moffitt, ).…”