Time-Inconsistency and Welfare Program Participation: Evidence from the NLSY

35 Pages Posted: 28 Oct 2009

See all articles by Hanming Fang

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Dan Silverman

University of Michigan at Ann Arbor - Economics Department; National Bureau of Economic Research (NBER)

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Abstract

We empirically implement a dynamic structural model of labor supply and welfare program participation for agents with potentially time-inconsistent preferences. Using panel data on the choices of single women with children from the National Longitudinal Surveys (NLSY) 1979, we provide estimates of the degree of time-inconsistency, and of its influence on the welfare take-up decision. With these estimates, we conduct counterfactual experiments to quantify a measure of the utility loss stemming from the inability to commit to future decisions, and the potential gains from commitment mechanisms such as welfare time limits and work requirements.

Suggested Citation

Fang, Hanming and Silverman, Dan, Time-Inconsistency and Welfare Program Participation: Evidence from the NLSY. International Economic Review, Vol. 50, No. 4, pp. 1043-1077, November 2009. Available at SSRN: https://ssrn.com/abstract=1495267 or http://dx.doi.org/10.1111/j.1468-2354.2009.00559.x

Hanming Fang (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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Dan Silverman

University of Michigan at Ann Arbor - Economics Department ( email )

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HOME PAGE: http://www.econ.lsa.umich.edu/

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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