What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments

59 Pages Posted: 28 Nov 2003 Last revised: 29 Aug 2021

See all articles by Marianne P. Bitler

Marianne P. Bitler

University of California, Davis - Departments of Economics and Agricultural Resource Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Jonah B. Gelbach

University of California, Berkeley - School of Law; NYU School of Law

Hilary Williamson Hoynes

University of California, Berkeley; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 2003

Abstract

Labor supply theory predicts systematic heterogeneity in the impact of recent welfare reforms on earnings, transfers, and income. Yet most welfare reform research focuses on mean impacts. We investigate the importance of heterogeneity using random-assignment data from Connecticut's Jobs First waiver features key elements of post-1996 welfare programs. Estimated quantile treatment effects exhibit the substantial heterogeneity predicted by labor supply theory. Thus mean impacts miss a great deal. Looking separately at dropouts and other women does not improve the performance of mean impacts. Evaluating Jobs First relative to AFDC using a class of social welfare functions, we find that Jobs First's performance depends on the degree of inequality aversion, the relative valuation of earnings and transfers, and whether one accounts for Jobs First's greater costs. We conclude that welfare reform's effects are likely both more varied and more extensive than has been recognized.

Suggested Citation

Bitler, Marianne P. and Gelbach, Jonah B. and Hoynes, Hilary Williamson, What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments (November 2003). NBER Working Paper No. w10121, Available at SSRN: https://ssrn.com/abstract=471471

Marianne P. Bitler

University of California, Davis - Departments of Economics and Agricultural Resource Economics ( email )

United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Jonah B. Gelbach

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

NYU School of Law ( email )

Hilary Williamson Hoynes (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

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