The Effect of Welfare Asset Rules on Auto Ownership, Employment, and Welfare Participation: A Longitudinal Analysis

28 Pages Posted: 22 Feb 2014

See all articles by Lorien A. Rice

Lorien A. Rice

Mills College Department of Economics

Cynthia Bansak

Saint Lawrence University - Department of Economics

Date Written: April 2014

Abstract

This paper investigates how asset tests for welfare eligibility affect auto ownership, employment, and welfare participation for single mothers without a college degree. We combine longitudinal data from the 1996 Survey of Income and Program Participation with data on state‐level welfare program rules from the Urban Institute and data on state‐level controls to test whether these single mothers were more likely to (1) own a car, (2) be employed, and (3) be off of welfare, depending on the welfare asset rules instituted in their state. We find evidence that, taken as a group, the asset rules have a statistically significant effect on the probability of car ownership. Ordinary least squares results and cross‐sectional two‐stage least squares (2SLS) results using the asset rules to instrument for car ownership show a large, positive, statistically significant effect of car ownership on employment. However, in 2SLS models controlling for prior car ownership and prior employment, the asset instruments are weaker and we do not find an effect of car ownership on employment. Of significance for policy makers, we find that the asset rules do not have a statistically significant joint effect on welfare participation, even after addressing possible endogeneity.

JEL Classification: I38, J68, J08

Suggested Citation

Rice, Lorien A. and Bansak, Cynthia, The Effect of Welfare Asset Rules on Auto Ownership, Employment, and Welfare Participation: A Longitudinal Analysis (April 2014). Contemporary Economic Policy, Vol. 32, Issue 2, pp. 306-333, 2014, Available at SSRN: https://ssrn.com/abstract=2399706 or http://dx.doi.org/10.1111/coep.12019

Lorien A. Rice (Contact Author)

Mills College Department of Economics ( email )

5000 MacArthur Boulevard
Oakland, CA 94613-1301
United States

Cynthia Bansak

Saint Lawrence University - Department of Economics ( email )

One Romoda Drive
Canton, NY 13617
United States

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