Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State

31 Pages Posted: 27 Nov 2012

See all articles by Magne Mogstad

Magne Mogstad

Statistics Norway; IZA Institute of Labor Economics

Chiara Pronzato

University of Essex - Institute for Social and Economic Research (ISER)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2012

Abstract

There is a heated debate in many developed countries about how to design a welfare system that moves lone mothers off welfare and into work. We analyze the consequences of a major Norwegian workfare reform of the generous welfare system for lone mothers. The reform imposed work requirements and time limits on welfare receipt, while raising in‐work benefits. Our difference‐in‐differences estimates show that the reform was successful in improving labor‐market participation and in increasing the earnings of lone mothers. However, the reform was associated with income loss and increased poverty among a sizeable subgroup of lone mothers, who were unable to offset the loss of out‐of‐work benefits with gains in earnings.

Keywords: Disposable income, earnings, labor‐market participation, lone mothers, poverty, workfare reform

JEL Classification: C23, I32, I38, J00

Suggested Citation

Mogstad, Magne and Pronzato, Chiara, Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State (December 2012). The Scandinavian Journal of Economics, Vol. 114, Issue 4, pp. 1129-1159, 2012. Available at SSRN: https://ssrn.com/abstract=2181266 or http://dx.doi.org/10.1111/j.1467-9442.2012.01722.x

Magne Mogstad (Contact Author)

Statistics Norway ( email )

N-0033 Oslo
Norway

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chiara Pronzato

University of Essex - Institute for Social and Economic Research (ISER) ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

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