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Effective Tax Rates and Guarantees in the AFDC Program, 1967-1982

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  • Thomas Fraker
  • Robert Moffitt
  • Douglas Wolf

Abstract

Estimates of effective tax rates on earned and unearned income and estimates of effective guarantees in the AFDC program by state are provided for the period 1967-1982. The results indicate that effective real guarantees fell every year from 1967 to 1981 but stabilized in 1982. Effective tax rates on unearned income rose steadily from 1967 to 1981 and took a particularly large additional jump in 1982. Effective tax rates on earned income fell after 1967, but then gradually rose throughout the 1970s until 1982, when they took a much larger jump. Thus, guarantees fell and tax rates rose over the 1970s as tight budgets forced states to restrict benefits, and in the early 1980s tax rates were pushed even higher by federal legislation.

Suggested Citation

  • Thomas Fraker & Robert Moffitt & Douglas Wolf, 1985. "Effective Tax Rates and Guarantees in the AFDC Program, 1967-1982," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 251-263.
    • Handle: RePEc:uwp:jhriss:v:20:y:1985:i:2:p:251-263
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    Cited by:

    1. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    2. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    3. John W. Graham, 1990. "Child Support And Mothers‘ Employment," Contemporary Economic Policy, Western Economic Association International, vol. 8(1), pages 95-109, January.
    4. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    5. James P. Ziliak, 2007. "Making Work Pay: Changes in Effective Tax Rates and Guarantees in U.S. Transfer Programs, 1983–2002," Journal of Human Resources, University of Wisconsin Press, vol. 42(3).
    6. Haveman, Robert & Scolex, John Karl, 1994. "Transfers, Taxes, and Welfare Reform," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(2), pages 417-434, June.
    7. Laurie J. Bassi, 1987. "Training the Disadvantaged," Evaluation Review, , vol. 11(4), pages 493-509, August.
    8. Christopher A. Swann, 2005. "Welfare Reform When Recipients Are Forward-Looking," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    9. P. A. Smith, "undated". "The Effect of the 1981 Welfare Reforms on AFDC Participation and Labor Supply," Institute for Research on Poverty Discussion Papers 1117-97, University of Wisconsin Institute for Research on Poverty.
    10. Howard Gensler, 1997. "Welfare and the family size decision of low-income, two-parent families," Applied Economics Letters, Taylor & Francis Journals, vol. 4(10), pages 607-610.
    11. R. Y. Kim & I. Garfinkel & D. R. Meyer, "undated". "Interaction effects of a child tax credit, national health insurance, and assured child support," Institute for Research on Poverty Discussion Papers 1047-94, University of Wisconsin Institute for Research on Poverty.
    12. Hau Chyi, 2013. "The Effects of Single Mothers’Welfare Participation and Work Decisions on Children’s Attainments," Working Papers 2013-10-14, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    13. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    14. Jacob Bastian, 2020. "The Rise of Working Mothers and the 1975 Earned Income Tax Credit," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 44-75, August.
    15. Dickert, Stacy & Houser, Scott & Scholz, John Karl, 1994. "Taxes and the Poor: A Microsimulation Study of Implicit and Explicit Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(3), pages 621-638, September.
    16. David Blau & PhiliP Robins, 1998. "A dynamic analysis of turnover in employment and child care," Demography, Springer;Population Association of America (PAA), vol. 35(1), pages 83-96, February.
    17. Philip K. Robins, 1990. "A Decade Of Declining Welfare Participation: Sorting Out The Causes," Contemporary Economic Policy, Western Economic Association International, vol. 8(1), pages 110-123, January.
    18. Miller, Robert A. & Sanders, Seth G., 1997. "Human capital development and welfare participation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 1-43, June.
    19. Haveman, Robert & Scolex, John Karl, 1994. "Transfers, Taxes, and Welfare Reform," National Tax Journal, National Tax Association, vol. 47(2), pages 417-34, June.
    20. D. R. Meyer & R. Y. Kim, "undated". "Incorporating labor supply responses into the estimated effects of an assured child support benefit," Institute for Research on Poverty Discussion Papers 1033-94, University of Wisconsin Institute for Research on Poverty.

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