Welfare, Workfare and Labor Supply: A Unified Evaluation

Francesco Agostinelli (), Emilio Borghesan () and Giuseppe Sorrenti ()
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Francesco Agostinelli: University of Pennsylvania
Emilio Borghesan: University of Pennsylvania
Giuseppe Sorrenti: University of Amsterdam

No 2020-083, Working Papers from Human Capital and Economic Opportunity Working Group

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.

Keywords: evaluation of social programs; EITC; TANF; tax and transfer (search for similar items in EconPapers)
JEL-codes: H30 I38 J08 J38 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-lma, nep-ltv and nep-pbe
Note: ECI
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Citations: View citations in EconPapers (1)

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http://humcap.uchicago.edu/RePEc/hka/wpaper/Agosti ... are-labor-supply.pdf First version, November, 2020 (application/pdf)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Agosti ... -labor-supply_v2.pdf Second version, June, 2021 (application/pdf)

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