Welfare Reform and the Labor Market
This paper reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, and the related empirical literature. We first present the canonical labor supply model of a classical welfare program, and then extend this basic framework to include in-kind transfers, incomplete take-up, human capital, preference persistence, and borrowing and saving. The empirical literature on these models is presented. The negative income tax, earnings subsidies, US welfare reforms with features that differ from those in other countries, and child care reforms are then surveyed both in terms of the theoretical model and the empirical literature surrounding each.
Prepared for the Annual Review of Economics. The authors would like to thank David Ribar, James Ziliak, Mike Brewer, and a referee for helpful comments. The research in this paper received no financial support from any outside agency or organization. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Marc K. Chan & Robert Moffitt, 2018. "Welfare Reform and the Labor Market," Annual Review of Economics, vol 10(1), pages 347-381. citation courtesy of