Welfare Dynamics Under Time Limits

Posted: 26 May 2003

See all articles by Jeffrey Grogger

Jeffrey Grogger

University of Chicago - Harris School of Public Policy; National Bureau of Economic Research (NBER)

Charles Michalopoulos

MDRC - Welfare Reform

Multiple version iconThere are 2 versions of this paper

Abstract

Among the most important changes brought about by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 are time limits, which provide consumers with an incentive to conserve their welfare benefits for future use. Among forward-looking, expected-utility-maximizing consumers who face liquidity constraints and earnings uncertainty, economic theory predicts that the incentive to conserve should be strongest among families with the youngest children. We test this prediction using data from Florida's Family Transition Program, a randomized welfare reform experiment. Our estimates generally exhibit the predicted age dependence, which suggests that time limits affect welfare use before they become binding. Our estimates indicate that, in the absence of other reforms that increased welfare use, FTP's time limit would have reduced welfare receipt by 16 percent.

Suggested Citation

Grogger, Jeffrey T. and Michalopoulos, Charles, Welfare Dynamics Under Time Limits. Journal of Political Economy, Vol. 111, June 2003. Available at SSRN: https://ssrn.com/abstract=397803

Jeffrey T. Grogger (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Charles Michalopoulos

MDRC - Welfare Reform ( email )

19th Floor
16 East 34th St.
New York, NY 10016-4326
United States
703-231-5942 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
465
PlumX Metrics