What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments

Marianne P. Bitler (), Jonah Gelbach and Hilary Williamson Hoynes

No 109, Working Papers from RAND Corporation Publications Department

Abstract: Labor supply theory predicts systematic heterogeneity in the impact of recent welfare reforms on earnings, transfers, and income. Yet most welfare reform research focuses on mean impacts. We investigate the importance of heterogeneity using random-assignment data from Connecticut's Jobs First waiver, which features key elements of post-1996 welfare programs. Estimated quantile treatment effects exhibit the substantial heterogeneity predicted by labor supply theory. Thus mean impacts miss a great deal. Looking separately at dropouts and other women does not improve the performance of mean impacts. Evaluating Jobs First relative to AFDC using a class of social welfare functions, we nd that Jobs First's performance depends on the degree of inequality aversion, the relative valuation of earnings and transfers, and whether one accounts for Jobs First's greater costs. We conclude that welfare reform's effects are likely both more varied and more extensive than has been recognized.

Date: 2003-11
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Working Paper: What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments (2005)
Working Paper: What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments (2003)
Working Paper: What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments (2005)
Journal Article: What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments (2006)
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