Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State

Magne Mogstad and Chiara Pronzato

No 4489, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: There is a heated debate in many European countries about a move towards a welfare system that increases the incentives for lone mothers to move off welfare and into work. We analyze the consequences of a major Norwegian workfare reform of the generous welfare system for lone mothers. Our difference-in-differences estimates show that the policy changes were successful in improving labor market attachment and increasing disposable income of new lone mothers. By contrast, the reform led to a substantial decrease in disposable income and a significant increase in poverty among persistent lone mothers, because a sizeable group was unable to offset the loss of out-of-work welfare benefits with gains in earnings. This suggests that the desired effects of the workfare reform were associated with the side-effects of income loss and increased poverty among a substantial number of lone mothers with insurmountable employment barriers. This finding stands in stark contrast to evidence from similar policy changes in Canada, the UK, and the US, and underscores that policymakers from other developed countries should be cautious when drawing lessons from the successful welfare reforms implemented in Anglo-Saxon countries.

Keywords: lone mothers; workfare reform; difference-in-differences; heterogeneity; earnings; labor force participation; poverty; disposable income (search for similar items in EconPapers)
JEL-codes: C23 I32 I38 J00 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009-10
New Economics Papers: this item is included in nep-hap and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Scandinavian Journal of Economics, 2012, 114 (4), 1129–1159

Downloads: (external link)
https://docs.iza.org/dp4489.pdf (application/pdf)

Related works:
Journal Article: Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State (2012)
Working Paper: Are lone mothers responsive to policy changes? The effects of a Norwegian workfare reform on earnings, education and poverty (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp4489

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().