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INEQUALITY, UNEMPLOYMENT, AND WORK INCENTIVES IN U.S. WELFARE BENEFITS

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Abstract:

In recent years, both state and federal welfare policy has shifted towards providing benefits that encourage or are explicitly conditioned on employment. Theory suggests that growing earnings inequality may be partly responsible for this shift in U.S. redistributive policy. To test this hypothesis, this paper examines both time trends in AFDC/TANF benefits over the 1980s and 1990s and state-by-state variation in AFDC/TANF marginal tax rates after welfare reform. I find that states with higher earnings inequality were more likely to reduce benefits and adopted significantly stronger work incentives during the 1990s welfare reforms. States with higher unemployment also adopted stronger work incentives as a part of welfare reform, but did not significantly change benefit levels. This result suggests that both unemployment levels and increasing earnings inequality has had a substantial impact on the basket of welfare policies provided by U.S. states in recent years. Growing inequality also helps to explain why the United States seems to prefer employment-focused programs like the Earned Income Tax Credit over programs like AFDC and why Congress passed a national welfare reform law in the late 1990s that substantially increased the ties between work and benefits.

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work (201), welfar (187), state (154), benefit (127), inequ (93), earn (87), increas (83), condit (83), recipi (79), incent (77), incom (70), result (62), program (61), chang (52), unemploy (46), level (45), reform (41), tax (40), maximum (39), measur (38), u.s (36),

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Welfare Reform Inequality Work Incentives
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Name: American Political Science Association
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MLA Citation:

MacRae, Duncan. "INEQUALITY, UNEMPLOYMENT, AND WORK INCENTIVES IN U.S. WELFARE BENEFITS" Paper presented at the annual meeting of the American Political Science Association, Philadelphia Marriott Hotel, Philadelphia, PA, Aug 27, 2003 <Not Available>. 2009-05-26 <http://www.allacademic.com/meta/p61958_index.html>

APA Citation:

MacRae, D. , 2003-08-27 "INEQUALITY, UNEMPLOYMENT, AND WORK INCENTIVES IN U.S. WELFARE BENEFITS" Paper presented at the annual meeting of the American Political Science Association, Philadelphia Marriott Hotel, Philadelphia, PA Online <.PDF>. 2009-05-26 from http://www.allacademic.com/meta/p61958_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: In recent years, both state and federal welfare policy has shifted towards providing benefits that encourage or are explicitly conditioned on employment. Theory suggests that growing earnings inequality may be partly responsible for this shift in U.S. redistributive policy. To test this hypothesis, this paper examines both time trends in AFDC/TANF benefits over the 1980s and 1990s and state-by-state variation in AFDC/TANF marginal tax rates after welfare reform. I find that states with higher earnings inequality were more likely to reduce benefits and adopted significantly stronger work incentives during the 1990s welfare reforms. States with higher unemployment also adopted stronger work incentives as a part of welfare reform, but did not significantly change benefit levels. This result suggests that both unemployment levels and increasing earnings inequality has had a substantial impact on the basket of welfare policies provided by U.S. states in recent years. Growing inequality also helps to explain why the United States seems to prefer employment-focused programs like the Earned Income Tax Credit over programs like AFDC and why Congress passed a national welfare reform law in the late 1990s that substantially increased the ties between work and benefits.

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Document Type: .pdf
Page count: 35
Word count: 10944
Text sample:
INEQUALITY UNEMPLOYMENT AND WORK INCENTIVES IN U.S. WELFARE BENEFITS DUNCAN C. MACRAE DMACRAE@UCLA.EDU DEPARTMENT OF POLITICAL SCIENCE UCLA AUGUST 2003 ABSTRACT: In recent years both state and federal welfare policy has shifted towards providing benefits that encourage or are explicitly conditioned on employment. Theory suggests that growing earnings inequality may be partly responsible for this shift in U.S. redistributive policy. To test this hypothesis this paper examines both time trends in AFDC/TANF benefits over the 1980s and 1990s and
10.24 -1.57 0.95 1.67 0.33 43 OK 1.78 9.39 8.81 -1.79 0.78 1.29 1.00 44 IL 2.00 10.02 9.32 -1.74 0.80 1.48 1.00 45 CT 2.03 10.76 10.06 -1.78 0.80 1.09 1.00 46 FL 2.25 9.70 8.89 -1.65 0.81 1.37 0.67 47 OH 2.27 10.12 9.30 -1.90 0.72 1.44 1.00 Z:\grogger3\ddrive\Duncan\Results\Work Conditioned Welfare\APSA Version\Work Conditioned Welfare 7.doc Printed On: 08/14/03 35


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