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  4. April 2016
  5. Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach

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

  • Patrick Kline
  • Melissa Tartari
American Economic Review
vol. 106, no. 4, April 2016
(pp. 972-1014)
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Abstract

We study the short-term impact of Connecticut's Jobs First welfare reform experiment on women's labor supply and welfare participation decisions. A nonparametric 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 nontrivial. (JEL H23, H75, I38, J16, J22)

Citation

Kline, Patrick, and Melissa Tartari. 2016. "Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach." American Economic Review, 106 (4): 972-1014. DOI: 10.1257/aer.20130824

Additional Materials

JEL Classification

  • H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • H75 State and Local Government: Health; Education; Welfare; Public Pensions
  • I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
  • J16 Economics of Gender; Non-labor Discrimination
  • J22 Time Allocation and Labor Supply