Spillover Effects of Welfare Reforms in State Labor Markets

35 Pages Posted: 17 Feb 2003

See all articles by Timothy Bartik

Timothy Bartik

W.E. Upjohn Institute for Employment Research

Abstract

This paper estimates the effects of welfare reforms on a state's employment and wage rates. Welfare reforms include: pushing welfare recipients into the labor force, financial incentives to recipients for working, wage subsidies to employers of recipients, and community service jobs for recipients. The effects of these policies are analyzed using a newly estimated model of state labor markets. Simulations show that jobs found by welfare reform participants cause sizable displacement effects for nonparticipants. Displacement effects of labor supply policies are highest when a state's unemployment is high, whereas displacement effects of labor demand policies are highest when a state's unemployment is low.

Suggested Citation

Bartik, Timothy, Spillover Effects of Welfare Reforms in State Labor Markets. Available at SSRN: https://ssrn.com/abstract=370475

Timothy Bartik (Contact Author)

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States

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