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Regional Welfare Programs and Labor Force Participation

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  • Sonya Kostova Huffman
  • Maureen Kilkenny

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.

Suggested Citation

  • Sonya Kostova Huffman & Maureen Kilkenny, 2003. "Regional Welfare Programs and Labor Force Participation," Center for Agricultural and Rural Development (CARD) Publications 02-wp296, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:02-wp296
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    References listed on IDEAS

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    1. W. Michael Cox & Jason L. Saving, 2000. "Some pleasant economic side effects," Southwest Economy, Federal Reserve Bank of Dallas, issue Jul, pages 7-9.
    2. Jeffrey Grogger, 2004. "Time Limits and Welfare Use," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    3. Schoeni, R.F. & Blank, R.M., 2000. "What Has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure," Papers 00-02, RAND - Labor and Population Program.
    4. Moffitt, Robert A., 2002. "Welfare programs and labor supply," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 34, pages 2393-2430, Elsevier.
    5. Schoeni, R.F. & Blank, R.M., 2000. "What Has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure," Papers 00-02, RAND - Labor and Population Program.
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    Cited by:

    1. Andrés Rodríguez-Pose & Vassilis Tselios, 2012. "Welfare Regimes and the Incentives to Work and Get Educated," Environment and Planning A, , vol. 44(1), pages 125-149, January.
    2. Gorton, Matthew & Sauer, Johannes & Supatpongkul, Pajaree, 2009. "Investigating Thai Shopping Behavior: Wet-Markets, Supermarkets and the ‘Big Middle’," 2009 Conference, August 16-22, 2009, Beijing, China 50332, International Association of Agricultural Economists.
    3. Udaya R. Wagle, 2012. "The Food Stamps Program and Economic Security Among Low‐Income Families, Part I," Poverty & Public Policy, John Wiley & Sons, vol. 4(4), pages 223-238, December.
    4. Uwaifo Oyelere, Ruth & Oyolola, Maharouf, 2009. "Welfare Usage in the U.S.: Does Immigrant Birthplace and Immigration Status Matter?," IZA Discussion Papers 4659, Institute of Labor Economics (IZA).
    5. Udaya R. Wagle, 2013. "The Food Stamps Program and Economic Security Among Low‐Income Families, Part II: The Effects of Labor and Income," Poverty & Public Policy, John Wiley & Sons, vol. 5(2), pages 162-179, June.
    6. Ruth Uwaifo Oyelere & Maharouf Oyolola, 2011. "Do Immigrant Groups Differ in Welfare Usage? Evidence from the U.S," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(3), pages 231-247, September.

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