Are We Understanding the Impact of Economic Conditions on Welfare Rolls?

Dan Black and Terra McKinnish

Australian Journal of Labour Economics (AJLE), 2002, vol. 5, issue 4, 489-505

Abstract: In this paper, we argue that welfare participation is more sensitive to economic conditions than previously believed. Why? Prior research focused on short-term economic fluctuations and ignored differences between high- and low-skilled workers. As welfare reform is long-term (i.e., permanent) it makes more sense to make comparisons with long-term economic trends. Also, since low-skilled workers are more likely to end up on welfare, it is proper to focus on their economic opportunities. Thus, we focus on the long-term impact of economic conditions on welfare participation, and we concentrate our analysis on low-skilled workers. Specifically, we analyze long-term changes in the supply of high-paying jobs for coal and steel workers as they affect certain heavy coal and steel-producing regions of the United States during the 1970s and 1980s. Our findings indicate that welfare participation in these regions closely mirrors the long-term local availability of high-paying jobs for low-skilled workers. This has serious policy implications for the long-term success of welfare reform.

Keywords: Government programs; provision and effects of welfare programs Macroeconomics; employment; unemployment; wages; wage indexation (search for similar items in EconPapers)
JEL-codes: E24 I31 (search for similar items in EconPapers)
Date: 2002
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Working Paper: Are We Understating the Impact of Economic Conditions on Welfare Rolls? (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ozl:journl:v:5:y:2002:i:4:p:489-505

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