Welfare Reform and the Labor Market

Posted: 7 Sep 2018

See all articles by Marc K. Chan

Marc K. Chan

University of Melbourne

Robert A. Moffitt

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

Date Written: August 2018


This article reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, as well as 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 childcare reforms are then surveyed in terms of both the theoretical models and the empirical literature surrounding each.

Suggested Citation

Chan, Marc K. and Moffitt, Robert, Welfare Reform and the Labor Market (August 2018). Annual Review of Economics, Vol. 10, pp. 347-381, 2018, Available at SSRN: https://ssrn.com/abstract=3245108 or http://dx.doi.org/10.1146/annurev-economics-080217-053452

Marc K. Chan (Contact Author)

University of Melbourne ( email )

111 Barry St
Carlton, Victoria

Robert Moffitt

Johns Hopkins University - Department of Economics ( email )

Baltimore, MD 21218-2685
United States
410-516-7611 (Phone)
410-516-7600 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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