NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach

Patrick Kline, Melissa Tartari

NBER Working Paper No. 20838
Issued in January 2015, Revised in November 2015
NBER Program(s):Economic Fluctuations and Growth, Labor Studies, Public Economics, Technical Working Papers

We study the short-term impact of Connecticut's Jobs First welfare reform experiment on women's labor supply and welfare participation decisions. A non-parametric optimizing model is shown to restrict the set of counterfactual choices compatible with each woman's actual choice. These revealed preference restrictions yield informative bounds on the frequency of several intensive and extensive margin responses to the experiment. We find that welfare reform induced many women to work but led some others to reduce their earnings in order to receive assistance. The bounds on this latter "opt-in" effect imply that intensive margin labor supply responses are non-trivial.

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Document Object Identifier (DOI): 10.3386/w20838

Published: Patrick Kline & Melissa Tartari, 2016. "Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach," American Economic Review, American Economic Association, vol. 106(4), pages 972-1014, April. citation courtesy of

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