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Marriage, Labor Supply and the Dynamics of the Social Safety Net
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Marriage, Labor Supply and the Dynamics of the Social Safety Net

Author

Listed:
  • Hamish Low

    (University of Cambridge)

  • Costas Meghir

    (Yale University)

  • Luigi Pistaferri

    (Stanford University)

  • Alessandra Voena

    (The University of Chicago)

Abstract

The 1996 PRWORA reform introduced time limits on the receipt of welfare in the United States. We use variation by state and across demographic groups to provide reduced form evidence showing that such limits led to a fall in welfare claims (partly due to "banking" benefits for future use), a rise in employment, and a decline in divorce rates. We then specify and estimate a life-cycle model of marriage, labor supply and divorce under limited commitment to better understand the mechanisms behind these behavioral responses, carry out counterfactual analysis with longer run impacts and evaluate the welfare effects of the program. Based on the model, which reproduces the reduced form estimates, we show that among low educated women, instead of relying on TANF, single mothers work more, more mothers remain married, some move to relying only on food stamps and, in ex-ante welfare terms, women are worse off.

Suggested Citation

  • Hamish Low & Costas Meghir & Luigi Pistaferri & Alessandra Voena, 2018. "Marriage, Labor Supply and the Dynamics of the Social Safety Net," Working Papers 2018-012, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2018-012
    Note: ECI
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    time limits; welfare reform; life-cycle; marriage and divorce;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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