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Welfare, Workfare and Labor Supply: A Unified Evaluation

Author

Listed:
  • Francesco Agostinelli

    (University of Pennsylvania)

  • Emilio Borghesan

    (University of Pennsylvania)

  • Giuseppe Sorrenti

    (University of Amsterdam)

Abstract

We analyze the extent to which labor supply responds to incentives created by social programs in the United States. We find evidence that the incentive and disincentive effects of the EITC and welfare programs on hours worked among single mothers are more extensive than previously found in the literature. We also show that the difference-in-differences design, frequently adopted in the existing literature, fails to identify a meaningful treatment parameter in the context of the welfare-to-workfare transition in the 1990s. Finally, we use our quasi-experimental estimates to identify a structural model of labor supply with multiple tax and transfer programs. Model counterfactuals show that the EITC's effect on labor supply depends on the regime of taxes and welfare system in place.

Suggested Citation

  • Francesco Agostinelli & Emilio Borghesan & Giuseppe Sorrenti, 2020. "Welfare, Workfare and Labor Supply: A Unified Evaluation," Working Papers 2020-083, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2020-083
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    References listed on IDEAS

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    More about this item

    Keywords

    evaluation of social programs; EITC; TANF; tax and transfer;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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