Welfare and women's earnings

Politics and Society

Volumn 25, Issue 4, 1997, Pages 417-442

  McCrate, Elaine ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0031285859     PISSN: 00323292     EISSN: None     Source Type: Journal    
DOI: 10.1177/0032329297025004003     Document Type: Review

References (80)

1. Jean B. Grossman, "The Impact of the Minimum Wage on Other Wages," Journal of Human Resources 18, no. 1 (1983): 359-78; Lawrence F. Katz and Alan B. Krueger, "The Effect of the Minimum Wage on the Fast-Food Industry, Industrial and Labor Relations Review 46, no. 1 (1992): 6-21.
2. Jean B. Grossman, "The Impact of the Minimum Wage on Other Wages," Journal of Human Resources 18, no. 1 (1983): 359-78; Lawrence F. Katz and Alan B. Krueger, "The Effect of the Minimum Wage on the Fast-Food Industry, Industrial and Labor Relations Review 46, no. 1 (1992): 6-21.
3. Gary Burtless, "The Employment Prospects of Welfare Recipients," manuscript, Brookings Institution, Washington, DC, August 23, 1994, p. 20.
4. Linda Levine, "Jobs for Welfare Recipients," report 94-457 E, Congressional Research Service, Washington, DC, May 13, 1994.
5. Lawrence Mishel and John Schmitt, "Cutting Wages by Cutting Welfare: The Impact of Reform on the Low-Wage Labor Market," Briefing Paper, Economic Policy Institute, Washington, DC, 1996; Chris Tilly, "Workfare's Impact on the New York City Labor Market: Lower Wages and Worker Displacement," Working Paper #92, Russell Sage Foundation, New York, March 1996. Also, Moffitt found that White men living in states with higher benefits (the sum of AFDC, food stamps, and Medicaid) seemed to get higher wages, although he cautioned that the apparent relationship may be attributed to unobserved state effects. Robert Moffitt, "The Distribution of Earnings and the Welfare State," in A Future of Lousy Jobs?, ed. Gary Burtless (Washington, DC: Brookings Institution, 1990), 201-35.
6. Lawrence Mishel and John Schmitt, "Cutting Wages by Cutting Welfare: The Impact of Reform on the Low-Wage Labor Market," Briefing Paper, Economic Policy Institute, Washington, DC, 1996; Chris Tilly, "Workfare's Impact on the New York City Labor Market: Lower Wages and Worker Displacement," Working Paper #92, Russell Sage Foundation, New York, March 1996. Also, Moffitt found that White men living in states with higher benefits (the sum of AFDC, food stamps, and Medicaid) seemed to get higher wages, although he cautioned that the apparent relationship may be attributed to unobserved state effects. Robert Moffitt, "The Distribution of Earnings and the Welfare State," in A Future of Lousy Jobs?, ed. Gary Burtless (Washington, DC: Brookings Institution, 1990), 201-35.
7. Lawrence Mishel and John Schmitt, "Cutting Wages by Cutting Welfare: The Impact of Reform on the Low-Wage Labor Market," Briefing Paper, Economic Policy Institute, Washington, DC, 1996; Chris Tilly, "Workfare's Impact on the New York City Labor Market: Lower Wages and Worker Displacement," Working Paper #92, Russell Sage Foundation, New York, March 1996. Also, Moffitt found that White men living in states with higher benefits (the sum of AFDC, food stamps, and Medicaid) seemed to get higher wages, although he cautioned that the apparent relationship may be attributed to unobserved state effects. Robert Moffitt, "The Distribution of Earnings and the Welfare State," in A Future of Lousy Jobs?, ed. Gary Burtless (Washington, DC: Brookings Institution, 1990), 201-35.
8. Frances Fox Piven and Richard A. Cloward, "The Historical Sources of the Contemporary Relief Debate," in The Mean Season: The Attack on the Welfare State, ed. Fred Block, Richard A. Cloward, Barbara Ehrenreich, and Frances Fox Piven, 3-44 (New York: Pantheon, 1987), 6.
9. Samuel Bowles, David Gordon, and Thomas Weisskopf, Beyond the Wasteland: A Democratic Alternative to Economic Decline (Garden City, NY: Anchor Press/Doubleday, 1983); Samuel Bowles and Herbert Gintis, "The Crisis of Liberal Democratic Capitalism: The Case of the United States," Politics & Society 11 (1982): 51-93; Bennett Harrison, "Welfare Payments and the Reproduction of Low-Wage Workers and Secondary Jobs," Review of Radical Political Economics 11, no. 2 (1979): 1-16; Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Press, 1971); Frances Fox Piven and Richard Cloward, The New Class War (New York: Vintage Books, 1981). On this point, political economists are joined by neoclassical job search theorists, who have developed a fair amount of econometric evidence on a similar issue, unemployment compensation. Fishe found that workers' acceptance wages fell by 15 percent when their unemployment compensation benefits ran out. Raymond Fishe, "Unemployment Insurance and the Reservation Wage of the Unemployed," Review of Economics and Statistics 64, no. 1 (1982): 12-17. Feldstein and Poterba found that a 10 percent increase in the unemployment insurance replacement ratio increased the reservation wage by about 4 percent for job losers who are not on layoff, and somewhat less for other unemployment groups. Martin Feldstein and James Poterba, "Unemployment Insurance and Reservation Wages," Journal of Public Economics 23 (1984): 141-67.
10. Samuel Bowles, David Gordon, and Thomas Weisskopf, Beyond the Wasteland: A Democratic Alternative to Economic Decline (Garden City, NY: Anchor Press/Doubleday, 1983); Samuel Bowles and Herbert Gintis, "The Crisis of Liberal Democratic Capitalism: The Case of the United States," Politics & Society 11 (1982): 51-93; Bennett Harrison, "Welfare Payments and the Reproduction of Low-Wage Workers and Secondary Jobs," Review of Radical Political Economics 11, no. 2 (1979): 1-16; Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Press, 1971); Frances Fox Piven and Richard Cloward, The New Class War (New York: Vintage Books, 1981). On this point, political economists are joined by neoclassical job search theorists, who have developed a fair amount of econometric evidence on a similar issue, unemployment compensation. Fishe found that workers' acceptance wages fell by 15 percent when their unemployment compensation benefits ran out. Raymond Fishe, "Unemployment Insurance and the Reservation Wage of the Unemployed," Review of Economics and Statistics 64, no. 1 (1982): 12-17. Feldstein and Poterba found that a 10 percent increase in the unemployment insurance replacement ratio increased the reservation wage by about 4 percent for job losers who are not on layoff, and somewhat less for other unemployment groups. Martin Feldstein and James Poterba, "Unemployment Insurance and Reservation Wages," Journal of Public Economics 23 (1984): 141-67.
11. Samuel Bowles, David Gordon, and Thomas Weisskopf, Beyond the Wasteland: A Democratic Alternative to Economic Decline (Garden City, NY: Anchor Press/Doubleday, 1983); Samuel Bowles and Herbert Gintis, "The Crisis of Liberal Democratic Capitalism: The Case of the United States," Politics & Society 11 (1982): 51-93; Bennett Harrison, "Welfare Payments and the Reproduction of Low-Wage Workers and Secondary Jobs," Review of Radical Political Economics 11, no. 2 (1979): 1-16; Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Press, 1971); Frances Fox Piven and Richard Cloward, The New Class War (New York: Vintage Books, 1981). On this point, political economists are joined by neoclassical job search theorists, who have developed a fair amount of econometric evidence on a similar issue, unemployment compensation. Fishe found that workers' acceptance wages fell by 15 percent when their unemployment compensation benefits ran out. Raymond Fishe, "Unemployment Insurance and the Reservation Wage of the Unemployed," Review of Economics and Statistics 64, no. 1 (1982): 12-17. Feldstein and Poterba found that a 10 percent increase in the unemployment insurance replacement ratio increased the reservation wage by about 4 percent for job losers who are not on layoff, and somewhat less for other unemployment groups. Martin Feldstein and James Poterba, "Unemployment Insurance and Reservation Wages," Journal of Public Economics 23 (1984): 141-67.
12. Samuel Bowles, David Gordon, and Thomas Weisskopf, Beyond the Wasteland: A Democratic Alternative to Economic Decline (Garden City, NY: Anchor Press/Doubleday, 1983); Samuel Bowles and Herbert Gintis, "The Crisis of Liberal Democratic Capitalism: The Case of the United States," Politics & Society 11 (1982): 51-93; Bennett Harrison, "Welfare Payments and the Reproduction of Low-Wage Workers and Secondary Jobs," Review of Radical Political Economics 11, no. 2 (1979): 1-16; Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Press, 1971); Frances Fox Piven and Richard Cloward, The New Class War (New York: Vintage Books, 1981). On this point, political economists are joined by neoclassical job search theorists, who have developed a fair amount of econometric evidence on a similar issue, unemployment compensation. Fishe found that workers' acceptance wages fell by 15 percent when their unemployment compensation benefits ran out. Raymond Fishe, "Unemployment Insurance and the Reservation Wage of the Unemployed," Review of Economics and Statistics 64, no. 1 (1982): 12-17. Feldstein and Poterba found that a 10 percent increase in the unemployment insurance replacement ratio increased the reservation wage by about 4 percent for job losers who are not on layoff, and somewhat less for other unemployment groups. Martin Feldstein and James Poterba, "Unemployment Insurance and Reservation Wages," Journal of Public Economics 23 (1984): 141-67.
13. Samuel Bowles, David Gordon, and Thomas Weisskopf, Beyond the Wasteland: A Democratic Alternative to Economic Decline (Garden City, NY: Anchor Press/Doubleday, 1983); Samuel Bowles and Herbert Gintis, "The Crisis of Liberal Democratic Capitalism: The Case of the United States," Politics & Society 11 (1982): 51-93; Bennett Harrison, "Welfare Payments and the Reproduction of Low-Wage Workers and Secondary Jobs," Review of Radical Political Economics 11, no. 2 (1979): 1-16; Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Press, 1971); Frances Fox Piven and Richard Cloward, The New Class War (New York: Vintage Books, 1981). On this point, political economists are joined by neoclassical job search theorists, who have developed a fair amount of econometric evidence on a similar issue, unemployment compensation. Fishe found that workers' acceptance wages fell by 15 percent when their unemployment compensation benefits ran out. Raymond Fishe, "Unemployment Insurance and the Reservation Wage of the Unemployed," Review of Economics and Statistics 64, no. 1 (1982): 12-17. Feldstein and Poterba found that a 10 percent increase in the unemployment insurance replacement ratio increased the reservation wage by about 4 percent for job losers who are not on layoff, and somewhat less for other unemployment groups. Martin Feldstein and James Poterba, "Unemployment Insurance and Reservation Wages," Journal of Public Economics 23 (1984): 141-67.
14. Samuel Bowles, David Gordon, and Thomas Weisskopf, Beyond the Wasteland: A Democratic Alternative to Economic Decline (Garden City, NY: Anchor Press/Doubleday, 1983); Samuel Bowles and Herbert Gintis, "The Crisis of Liberal Democratic Capitalism: The Case of the United States," Politics & Society 11 (1982): 51-93; Bennett Harrison, "Welfare Payments and the Reproduction of Low-Wage Workers and Secondary Jobs," Review of Radical Political Economics 11, no. 2 (1979): 1-16; Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Press, 1971); Frances Fox Piven and Richard Cloward, The New Class War (New York: Vintage Books, 1981). On this point, political economists are joined by neoclassical job search theorists, who have developed a fair amount of econometric evidence on a similar issue, unemployment compensation. Fishe found that workers' acceptance wages fell by 15 percent when their unemployment compensation benefits ran out. Raymond Fishe, "Unemployment Insurance and the Reservation Wage of the Unemployed," Review of Economics and Statistics 64, no. 1 (1982): 12-17. Feldstein and Poterba found that a 10 percent increase in the unemployment insurance replacement ratio increased the reservation wage by about 4 percent for job losers who are not on layoff, and somewhat less for other unemployment groups. Martin Feldstein and James Poterba, "Unemployment Insurance and Reservation Wages," Journal of Public Economics 23 (1984): 141-67.
15. Samuel Bowles, David Gordon, and Thomas Weisskopf, Beyond the Wasteland: A Democratic Alternative to Economic Decline (Garden City, NY: Anchor Press/Doubleday, 1983); Samuel Bowles and Herbert Gintis, "The Crisis of Liberal Democratic Capitalism: The Case of the United States," Politics & Society 11 (1982): 51-93; Bennett Harrison, "Welfare Payments and the Reproduction of Low-Wage Workers and Secondary Jobs," Review of Radical Political Economics 11, no. 2 (1979): 1-16; Frances Fox Piven and Richard Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Press, 1971); Frances Fox Piven and Richard Cloward, The New Class War (New York: Vintage Books, 1981). On this point, political economists are joined by neoclassical job search theorists, who have developed a fair amount of econometric evidence on a similar issue, unemployment compensation. Fishe found that workers' acceptance wages fell by 15 percent when their unemployment compensation benefits ran out. Raymond Fishe, "Unemployment Insurance and the Reservation Wage of the Unemployed," Review of Economics and Statistics 64, no. 1 (1982): 12-17. Feldstein and Poterba found that a 10 percent increase in the unemployment insurance replacement ratio increased the reservation wage by about 4 percent for job losers who are not on layoff, and somewhat less for other unemployment groups. Martin Feldstein and James Poterba, "Unemployment Insurance and Reservation Wages," Journal of Public Economics 23 (1984): 141-67.
16. No study of the relative costs and benefits of welfare and work has been done for the entire country, but the few state and local studies which do exist are highly indicative. Renwick and Bergmann found that a single parent at home with two preschool children in New York State who received AFDC, Medicaid, and food stamps would be $200 short of the amount necessary to pay for a Basic Needs Budget. After a transitional period of employment, such a woman employed at the minimum wage would have a monthly deficit of $642 per month if her employer paid for her health insurance, and a deficit of $759 if the employer did not. McCrate and Smith found that a single mother on welfare with two children would fall short of a similarly constructed Basic Needs Budget for Vermont and that women employed half-time at average state female wages in clerical, service, and trade occupations fell short by about the same amount. A calculation by the U.S. House Ways and Means Committee showed that a woman living in Pennsylvania earning $10,000 per year would have only slightly more disposable income than a woman who did not work outside the home at all, after subtracting social security taxes, state and federal income taxes, and work and child care expenses. Kathryn Edin and Laura Lein found that a sample of employed women in Chicago, San Antonio, Charleston, and Boston actually ran larger household deficits based on the income from their main jobs than did women who relied primarily on welfare (cf. "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," unpublished manuscript, 1995, Tables 2-6 and 4-4). Trudi J. Renwick and Barbara Bergmann, "A Budget-Based Definition of Poverty, with an Application to Single-Parent Families," Journal of Human Resources 28, no. 1 (1993): 1-24; Elaine McCrate and Joan Smith, "When Work Doesn't Work: Welfare Reform in the Vermont Economy," manuscript, University of Vermont, 1995; U.S. House of Representatives, Committee on Ways and Means, Green Book: Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Washington, DC: U.S. Government Printing Office, annual, 1982-94); Kathryn Edin and Laura Lein, "Making Ends Meet: The Survival Strategies of Low-Income Mothers," manuscript, 1995.
17. No study of the relative costs and benefits of welfare and work has been done for the entire country, but the few state and local studies which do exist are highly indicative. Renwick and Bergmann found that a single parent at home with two preschool children in New York State who received AFDC, Medicaid, and food stamps would be $200 short of the amount necessary to pay for a Basic Needs Budget. After a transitional period of employment, such a woman employed at the minimum wage would have a monthly deficit of $642 per month if her employer paid for her health insurance, and a deficit of $759 if the employer did not. McCrate and Smith found that a single mother on welfare with two children would fall short of a similarly constructed Basic Needs Budget for Vermont and that women employed half-time at average state female wages in clerical, service, and trade occupations fell short by about the same amount. A calculation by the U.S. House Ways and Means Committee showed that a woman living in Pennsylvania earning $10,000 per year would have only slightly more disposable income than a woman who did not work outside the home at all, after subtracting social security taxes, state and federal income taxes, and work and child care expenses. Kathryn Edin and Laura Lein found that a sample of employed women in Chicago, San Antonio, Charleston, and Boston actually ran larger household deficits based on the income from their main jobs than did women who relied primarily on welfare (cf. "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," unpublished manuscript, 1995, Tables 2-6 and 4-4). Trudi J. Renwick and Barbara Bergmann, "A Budget-Based Definition of Poverty, with an Application to Single-Parent Families," Journal of Human Resources 28, no. 1 (1993): 1-24; Elaine McCrate and Joan Smith, "When Work Doesn't Work: Welfare Reform in the Vermont Economy," manuscript, University of Vermont, 1995; U.S. House of Representatives, Committee on Ways and Means, Green Book: Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Washington, DC: U.S. Government Printing Office, annual, 1982-94); Kathryn Edin and Laura Lein, "Making Ends Meet: The Survival Strategies of Low-Income Mothers," manuscript, 1995.
18. No study of the relative costs and benefits of welfare and work has been done for the entire country, but the few state and local studies which do exist are highly indicative. Renwick and Bergmann found that a single parent at home with two preschool children in New York State who received AFDC, Medicaid, and food stamps would be $200 short of the amount necessary to pay for a Basic Needs Budget. After a transitional period of employment, such a woman employed at the minimum wage would have a monthly deficit of $642 per month if her employer paid for her health insurance, and a deficit of $759 if the employer did not. McCrate and Smith found that a single mother on welfare with two children would fall short of a similarly constructed Basic Needs Budget for Vermont and that women employed half-time at average state female wages in clerical, service, and trade occupations fell short by about the same amount. A calculation by the U.S. House Ways and Means Committee showed that a woman living in Pennsylvania earning $10,000 per year would have only slightly more disposable income than a woman who did not work outside the home at all, after subtracting social security taxes, state and federal income taxes, and work and child care expenses. Kathryn Edin and Laura Lein found that a sample of employed women in Chicago, San Antonio, Charleston, and Boston actually ran larger household deficits based on the income from their main jobs than did women who relied primarily on welfare (cf. "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," unpublished manuscript, 1995, Tables 2-6 and 4-4). Trudi J. Renwick and Barbara Bergmann, "A Budget-Based Definition of Poverty, with an Application to Single-Parent Families," Journal of Human Resources 28, no. 1 (1993): 1-24; Elaine McCrate and Joan Smith, "When Work Doesn't Work: Welfare Reform in the Vermont Economy," manuscript, University of Vermont, 1995; U.S. House of Representatives, Committee on Ways and Means, Green Book: Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Washington, DC: U.S. Government Printing Office, annual, 1982-94); Kathryn Edin and Laura Lein, "Making Ends Meet: The Survival Strategies of Low-Income Mothers," manuscript, 1995.
19. No study of the relative costs and benefits of welfare and work has been done for the entire country, but the few state and local studies which do exist are highly indicative. Renwick and Bergmann found that a single parent at home with two preschool children in New York State who received AFDC, Medicaid, and food stamps would be $200 short of the amount necessary to pay for a Basic Needs Budget. After a transitional period of employment, such a woman employed at the minimum wage would have a monthly deficit of $642 per month if her employer paid for her health insurance, and a deficit of $759 if the employer did not. McCrate and Smith found that a single mother on welfare with two children would fall short of a similarly constructed Basic Needs Budget for Vermont and that women employed half-time at average state female wages in clerical, service, and trade occupations fell short by about the same amount. A calculation by the U.S. House Ways and Means Committee showed that a woman living in Pennsylvania earning $10,000 per year would have only slightly more disposable income than a woman who did not work outside the home at all, after subtracting social security taxes, state and federal income taxes, and work and child care expenses. Kathryn Edin and Laura Lein found that a sample of employed women in Chicago, San Antonio, Charleston, and Boston actually ran larger household deficits based on the income from their main jobs than did women who relied primarily on welfare (cf. "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," unpublished manuscript, 1995, Tables 2-6 and 4-4). Trudi J. Renwick and Barbara Bergmann, "A Budget-Based Definition of Poverty, with an Application to Single-Parent Families," Journal of Human Resources 28, no. 1 (1993): 1-24; Elaine McCrate and Joan Smith, "When Work Doesn't Work: Welfare Reform in the Vermont Economy," manuscript, University of Vermont, 1995; U.S. House of Representatives, Committee on Ways and Means, Green Book: Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Washington, DC: U.S. Government Printing Office, annual, 1982-94); Kathryn Edin and Laura Lein, "Making Ends Meet: The Survival Strategies of Low-Income Mothers," manuscript, 1995.
20. No study of the relative costs and benefits of welfare and work has been done for the entire country, but the few state and local studies which do exist are highly indicative. Renwick and Bergmann found that a single parent at home with two preschool children in New York State who received AFDC, Medicaid, and food stamps would be $200 short of the amount necessary to pay for a Basic Needs Budget. After a transitional period of employment, such a woman employed at the minimum wage would have a monthly deficit of $642 per month if her employer paid for her health insurance, and a deficit of $759 if the employer did not. McCrate and Smith found that a single mother on welfare with two children would fall short of a similarly constructed Basic Needs Budget for Vermont and that women employed half-time at average state female wages in clerical, service, and trade occupations fell short by about the same amount. A calculation by the U.S. House Ways and Means Committee showed that a woman living in Pennsylvania earning $10,000 per year would have only slightly more disposable income than a woman who did not work outside the home at all, after subtracting social security taxes, state and federal income taxes, and work and child care expenses. Kathryn Edin and Laura Lein found that a sample of employed women in Chicago, San Antonio, Charleston, and Boston actually ran larger household deficits based on the income from their main jobs than did women who relied primarily on welfare (cf. "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," unpublished manuscript, 1995, Tables 2-6 and 4-4). Trudi J. Renwick and Barbara Bergmann, "A Budget-Based Definition of Poverty, with an Application to Single-Parent Families," Journal of Human Resources 28, no. 1 (1993): 1-24; Elaine McCrate and Joan Smith, "When Work Doesn't Work: Welfare Reform in the Vermont Economy," manuscript, University of Vermont, 1995; U.S. House of Representatives, Committee on Ways and Means, Green Book: Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Washington, DC: U.S. Government Printing Office, annual, 1982-94); Kathryn Edin and Laura Lein, "Making Ends Meet: The Survival Strategies of Low-Income Mothers," manuscript, 1995.
21. U.S. House of Representatives, Committee on Ways and Means, Green Book; Robert Moffitt, "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature 30, no. 1 (1992): 1-61.
22. Roberta Spalter-Roth, Beverly Burr, Lois Shaw, and Heidi Hartmann, Welfare That Works, report, Institute for Women's Policy Research, Washington, DC, 1994. Edin and Lein, "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," 1995; Christopher Jencks, and Kathryn Edin, "The Real Welfare Problem," American Prospect 1 (1990): 30-50.
23. Roberta Spalter-Roth, Beverly Burr, Lois Shaw, and Heidi Hartmann, Welfare That Works, report, Institute for Women's Policy Research, Washington, DC, 1994. Edin and Lein, "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," 1995; Christopher Jencks, and Kathryn Edin, "The Real Welfare Problem," American Prospect 1 (1990): 30-50.
24. Roberta Spalter-Roth, Beverly Burr, Lois Shaw, and Heidi Hartmann, Welfare That Works, report, Institute for Women's Policy Research, Washington, DC, 1994. Edin and Lein, "Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work," 1995; Christopher Jencks, and Kathryn Edin, "The Real Welfare Problem," American Prospect 1 (1990): 30-50.
25. The structural system determining wages consists of a demand equation and a supply equation. If these are solved simultaneously for wages, the result is a reduced-form wage equation.
26. The term "state effects" is used rather loosely to refer both to the characteristics of states and to the effects of those characteristics, depending on context.
27. Frances Fox Piven and Richard A. Cloward, "The Welfare Rights Movement," in Poor People's Movements: Why They Succeed, How They Fail, ed. Frances Fox Piven and Richard A. Cloward (New York: Pantheon Books, 1977), 264-362; Michael Katz, In the Shadow of the Poorhouse: A Social History of Welfare in America (New York: Basic Books, 1986); Jill Quadagno, The Color of Welfare: How Racism Undermined the War on Poverty (New York: Oxford University Press, 1994).
28. Frances Fox Piven and Richard A. Cloward, "The Welfare Rights Movement," in Poor People's Movements: Why They Succeed, How They Fail, ed. Frances Fox Piven and Richard A. Cloward (New York: Pantheon Books, 1977), 264-362; Michael Katz, In the Shadow of the Poorhouse: A Social History of Welfare in America (New York: Basic Books, 1986); Jill Quadagno, The Color of Welfare: How Racism Undermined the War on Poverty (New York: Oxford University Press, 1994).
29. Frances Fox Piven and Richard A. Cloward, "The Welfare Rights Movement," in Poor People's Movements: Why They Succeed, How They Fail, ed. Frances Fox Piven and Richard A. Cloward (New York: Pantheon Books, 1977), 264-362; Michael Katz, In the Shadow of the Poorhouse: A Social History of Welfare in America (New York: Basic Books, 1986); Jill Quadagno, The Color of Welfare: How Racism Undermined the War on Poverty (New York: Oxford University Press, 1994).
30. "Semi-log" refers to an equation which uses the natural logarithm of the wage as the dependent variable so that each coefficient can be read approximately as the percentage change in wages associated with a unit change in the explanatory variable.
31. "White" refers to non-Black, non-Latina respondents. The supplemental poor White sample was excluded.
32. I also excluded nineteen cases from Arizona because it does not operate a traditional Medicaid program and comparable data on its health benefits for welfare families were not available.
33. The age eighteen limit was imposed because it was impossible to create a consistent recode on experience for older respondents prior to age eighteen.
34. The maximum AFDC payment is given to families who are otherwise destitute, that is, who have no other countable income. Data on state welfare and food stamp payments are from U.S. House of Representatives, Committee on Ways and Means, Green Book. Data were deflated by the overall consumer price index (CPI).
35. Data from U.S. House of Representatives, Committee on Ways and Means, Green Book. The Medicaid data are average annual expenditures per categorically needy AFDC child and adult in each state. For a monthly family figure, I added two children's payments plus one adult's and divided by twelve. I deflated this figure by the medical cost index of the CPI.
36. The typical benefit package does not include housing benefits. Only 23.5 percent of welfare recipients get any form of housing assistance. Congressional Information Service, 7997 AFDC Recipient Characteristics Study, microfiche, Washington, DC, 1993.
37. Also, a family's gross income minus disregards for child care and work expenses must be below the state's need standard, and from 1985 onward, their gross income must be below 1.85 of the state's standard (below 1.5 of the standard from 1982 to 1984). Janet Currie and Jonathan Gruber, "Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women," working paper no. 4644, National Bureau of Economic Research, Cambridge, 1994. The payment standard is generally expressed as a percentage of the need standard.
38. Samuel Bowles, "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review 75, no. 1 (1985): 16-36; Samuel Bowles and Juliet Schor, "Employment Rents and the Incidence of Strikes," Review of Economics and Statistics 64, no. 4 (1987): 584-91.
39. Samuel Bowles, "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review 75, no. 1 (1985): 16-36; Samuel Bowles and Juliet Schor, "Employment Rents and the Incidence of Strikes," Review of Economics and Statistics 64, no. 4 (1987): 584-91.
40. The exceptions were a few of the states with benefits below the state need standard, which used "fill-the-gap" budgeting in determining welfare levels. Fill-the-gap involves a benefit reduction rate below 100 percent until income rises to the need standard. In the 1980s, southern states were most likely to use fill-the-gap budgeting (consistent with the historical southern concern to maintain a large supply of low-wage labor), although in other respects their eligibility criteria were more restrictive.
41. The federal government gave states expanded options in the late 1980s to extend Medicaid coverage to low-income, non-AFDC populations. The latitude for state discretion was changed almost on an annual basis starting in 1984, and expanded greatly in 1987-88. It is extremely difficult to find out exactly which states availed themselves of which options at what time.
42. When people are not randomly sorted into a group (in this case, those employed in a certain year), coefficients which are intended to measure effects of measured variables will also pick up the effect of an unmeasured characteristic, that is, being the type of person who was "selected" into the nonrandom group. In this case, year dummies will measure not only the effect of time-specific factors but also the effect of being a nonemployed person from time t to 1989.
43. ij This also requires that the coefficients do not vary over time. The result is that with longitudinal data, it is not even necessary to have a measure of the fixed effects.
44. The noise-to-signal ratio is the relative size of the unexplained and explained variance.
45. The southern dummy was omitted because it was perfectly collinear with the set of southern state dummies.
46. Only about 5 percent of the AFDC caseload consists of AFDC-Unemployed Parent families. Men may indirectly receive a portion of AFDC benefits through their relationships with women, as nonrecipient sons, friends, or unmarried partners. Thus their labor supply and wages may be affected as well. However, Rich found that the employment of White teenage males was not affected, ceteris paribus, by welfare receipt in their families; that of Black male teenagers was only marginally affected. The employment of men aged eighteen to sixty-five is not likely to be affected more than that of teenagers. Lauren Rich, "AFDC Receipt and the Schooling and Employment Decisions of Young Men," manuscript, University of Michigan, 1995. Also, if men compete in the same labor markets as low-wage women, their wages will be influenced by women's receipt of welfare. However, most men aged eighteen to sixty-five are not competing with women under the age of thirty-two. To the extent that men's wages are influenced by welfare, for whatever reason, the proxy will pick up more of the effect of welfare, and the estimated welfare effect will be biased downward.
47. I alternatively used state unemployment rates, but their coefficients were not as large or significant, and they had less influence on the welfare coefficient than local rates.
48. David G. Blanchflower and Andrew J. Oswald, The Wage Curve (Cambridge, MA: MIT Press, 1994).
49. Council of State Governments, The Book of the States, Lexington, Kentucky: various issues, 1984-85 to 1994-95.
50. In the spirit of pure speculation, this could be a concentration of "high-tech" industry.
51. Data on union density are from U.S. Department of Commerce, Statistical Abstract of the United States (Washington, DC: various years). interpolated for years which were not available. Data on industrial composition are based on establishment data reported in U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (Washington, DC: various years).
52. Data on union density are from U.S. Department of Commerce, Statistical Abstract of the United States (Washington, DC: various years). interpolated for years which were not available. Data on industrial composition are based on establishment data reported in U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (Washington, DC: various years).
53. Microdata estimates on standard errors for variables which consist of state averages may be biased downward because the residual might be correlated within cells. Brent R. Moulton, "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Units," The Review of Economics and Statistics 72, no. 2 (1990): 334-8. Bartik suggests the use of an F test on the additional explanatory power of all the state dummies to determine the extent of this type of problem. Timothy Bartik, Who Benefits from State and Local Economic Development Policies? (Kalamazoo, MI: WE. Upjohn Institute for Employment Research, 1991). The square root of the F statistic gives an estimate of the extent to which the standard error must be inflated. For W-L, that statistic suggested that the standard error on the welfare variable in column 8 was inflated somewhat. Even after making the adjustment, however, the welfare variable was still significant at the 5.5 percent level. For B-L, the test yielded no evidence of this problem.
54. Microdata estimates on standard errors for variables which consist of state averages may be biased downward because the residual might be correlated within cells. Brent R. Moulton, "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Units," The Review of Economics and Statistics 72, no. 2 (1990): 334-8. Bartik suggests the use of an F test on the additional explanatory power of all the state dummies to determine the extent of this type of problem. Timothy Bartik, Who Benefits from State and Local Economic Development Policies? (Kalamazoo, MI: WE. Upjohn Institute for Employment Research, 1991). The square root of the F statistic gives an estimate of the extent to which the standard error must be inflated. For W-L, that statistic suggested that the standard error on the welfare variable in column 8 was inflated somewhat. Even after making the adjustment, however, the welfare variable was still significant at the 5.5 percent level. For B-L, the test yielded no evidence of this problem.
55. Piven and Cloward, "The Historical Sources," pp. 10-11; see also Katz, In the Shadow of the Poorhouse; Piven and Cloward, Regulating the Poor, Piven and Cloward, The New Class War; Quadagno, The Color of Welfare.
56. Piven and Cloward, "The Historical Sources," pp. 10-11; see also Katz, In the Shadow of the Poorhouse; Piven and Cloward, Regulating the Poor, Piven and Cloward, The New Class War; Quadagno, The Color of Welfare.
57. Piven and Cloward, "The Historical Sources," pp. 10-11; see also Katz, In the Shadow of the Poorhouse; Piven and Cloward, Regulating the Poor, Piven and Cloward, The New Class War; Quadagno, The Color of Welfare.
58. Piven and Cloward, "The Historical Sources," pp. 10-11; see also Katz, In the Shadow of the Poorhouse; Piven and Cloward, Regulating the Poor, Piven and Cloward, The New Class War; Quadagno, The Color of Welfare.
59. Piven and Cloward, "The Historical Sources," pp. 10-11; see also Katz, In the Shadow of the Poorhouse; Piven and Cloward, Regulating the Poor, Piven and Cloward, The New Class War; Quadagno, The Color of Welfare.
60. Katz, In the Shadow of the Poorhouse; Lee J. Alston and Joseph Ferrie, "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review 83, no. 4 (1993): 852-76; Winifred Bell, Aid to Dependent Children (New York: Columbia University Press, 1965); Quadagno, The Color of Welfare, 129-31; Vincent J. Burke and Vee Burke, Nixon's Good Deed: Welfare Reform (New York: Columbia University Press, 1974). Southern employer opposition to higher benefit levels is consistent with the well documented resistance by some southerners even to the development of high-wage blue-collar employment. Although Wright argues correctly that this resistance subsided in the 1970s, there is evidence that it flourishes in some areas (especially rural) to this day. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York: Basic Books, 1986); Carol Stack, "Election Day," chap. 8 in her Call to Home: African Americans Reclaim the Rural South (New York: Basic Books, 1996).
61. Katz, In the Shadow of the Poorhouse; Lee J. Alston and Joseph Ferrie, "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review 83, no. 4 (1993): 852-76; Winifred Bell, Aid to Dependent Children (New York: Columbia University Press, 1965); Quadagno, The Color of Welfare, 129-31; Vincent J. Burke and Vee Burke, Nixon's Good Deed: Welfare Reform (New York: Columbia University Press, 1974). Southern employer opposition to higher benefit levels is consistent with the well documented resistance by some southerners even to the development of high-wage blue-collar employment. Although Wright argues correctly that this resistance subsided in the 1970s, there is evidence that it flourishes in some areas (especially rural) to this day. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York: Basic Books, 1986); Carol Stack, "Election Day," chap. 8 in her Call to Home: African Americans Reclaim the Rural South (New York: Basic Books, 1996).
62. Katz, In the Shadow of the Poorhouse; Lee J. Alston and Joseph Ferrie, "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review 83, no. 4 (1993): 852-76; Winifred Bell, Aid to Dependent Children (New York: Columbia University Press, 1965); Quadagno, The Color of Welfare, 129-31; Vincent J. Burke and Vee Burke, Nixon's Good Deed: Welfare Reform (New York: Columbia University Press, 1974). Southern employer opposition to higher benefit levels is consistent with the well documented resistance by some southerners even to the development of high-wage blue-collar employment. Although Wright argues correctly that this resistance subsided in the 1970s, there is evidence that it flourishes in some areas (especially rural) to this day. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York: Basic Books, 1986); Carol Stack, "Election Day," chap. 8 in her Call to Home: African Americans Reclaim the Rural South (New York: Basic Books, 1996).
63. Katz, In the Shadow of the Poorhouse; Lee J. Alston and Joseph Ferrie, "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review 83, no. 4 (1993): 852-76; Winifred Bell, Aid to Dependent Children (New York: Columbia University Press, 1965); Quadagno, The Color of Welfare, 129-31; Vincent J. Burke and Vee Burke, Nixon's Good Deed: Welfare Reform (New York: Columbia University Press, 1974). Southern employer opposition to higher benefit levels is consistent with the well documented resistance by some southerners even to the development of high-wage blue-collar employment. Although Wright argues correctly that this resistance subsided in the 1970s, there is evidence that it flourishes in some areas (especially rural) to this day. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York: Basic Books, 1986); Carol Stack, "Election Day," chap. 8 in her Call to Home: African Americans Reclaim the Rural South (New York: Basic Books, 1996).
64. Katz, In the Shadow of the Poorhouse; Lee J. Alston and Joseph Ferrie, "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review 83, no. 4 (1993): 852-76; Winifred Bell, Aid to Dependent Children (New York: Columbia University Press, 1965); Quadagno, The Color of Welfare, 129-31; Vincent J. Burke and Vee Burke, Nixon's Good Deed: Welfare Reform (New York: Columbia University Press, 1974). Southern employer opposition to higher benefit levels is consistent with the well documented resistance by some southerners even to the development of high-wage blue-collar employment. Although Wright argues correctly that this resistance subsided in the 1970s, there is evidence that it flourishes in some areas (especially rural) to this day. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York: Basic Books, 1986); Carol Stack, "Election Day," chap. 8 in her Call to Home: African Americans Reclaim the Rural South (New York: Basic Books, 1996).
65. Katz, In the Shadow of the Poorhouse; Lee J. Alston and Joseph Ferrie, "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review 83, no. 4 (1993): 852-76; Winifred Bell, Aid to Dependent Children (New York: Columbia University Press, 1965); Quadagno, The Color of Welfare, 129-31; Vincent J. Burke and Vee Burke, Nixon's Good Deed: Welfare Reform (New York: Columbia University Press, 1974). Southern employer opposition to higher benefit levels is consistent with the well documented resistance by some southerners even to the development of high-wage blue-collar employment. Although Wright argues correctly that this resistance subsided in the 1970s, there is evidence that it flourishes in some areas (especially rural) to this day. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York: Basic Books, 1986); Carol Stack, "Election Day," chap. 8 in her Call to Home: African Americans Reclaim the Rural South (New York: Basic Books, 1996).
66. Katz, In the Shadow of the Poorhouse; Lee J. Alston and Joseph Ferrie, "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review 83, no. 4 (1993): 852-76; Winifred Bell, Aid to Dependent Children (New York: Columbia University Press, 1965); Quadagno, The Color of Welfare, 129-31; Vincent J. Burke and Vee Burke, Nixon's Good Deed: Welfare Reform (New York: Columbia University Press, 1974). Southern employer opposition to higher benefit levels is consistent with the well documented resistance by some southerners even to the development of high-wage blue-collar employment. Although Wright argues correctly that this resistance subsided in the 1970s, there is evidence that it flourishes in some areas (especially rural) to this day. Gavin Wright, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York: Basic Books, 1986); Carol Stack, "Election Day," chap. 8 in her Call to Home: African Americans Reclaim the Rural South (New York: Basic Books, 1996).
67. Unions may also be expected to lobby for higher welfare benefits (and against time limits, etc.), but the historical record on union activity is much more sparse than that for employers. Congressional testimony shows that unions did get involved in the Nixon welfare reform bill, generally arguing for higher guarantee levels but against the provision which would have expanded families' ability to combine employment and welfare. In the most recent round of welfare reform, only a few unions, such as 1199 and the Service Employees International Union, have taken a strong position.
68. Ironically, the recently enacted time limits will provide a "natural experiment" on the wage effects of welfare.
69. Benjamin I. Page and Robert Y. Shapiro, The Rational Public: Fifty Years of Trends in Americans' Policy Preferences (Chicago: University of Chicago Press, 1992), 301.
70. Fay Lomax Cook and Edith J. Barrett, Support for the American Welfare State (New York: Columbia University Press, 1992), 154.
71. Edin and Lein, "Making Ends Meet." This is despite the fact that their primarily welfare-dependent sample and their primarily work-dependent sample looked nearly identical in all but one respect. The one way in which they differed was quite telling: women who were able to survive on low wages without welfare invariably had access to male income, either as wives or as the few fortunate ex-wives who received significant child support.
72. The previous footnote implies that the instability of marriage helps to blur the line.
73. The AFDC program was a negative income tax for unmarried mothers between 1967 and 1981, when the nominal implicit tax rate on other income was 67 percent (and the income guarantee was determined by individual states). This kind of scheme has both positive and negative effects on labor supply, which empirically seem to cancel each other out, leaving the predominant effect as that of the income guarantee. In the first Reagan budget, the tax rate was increased to 100 percent, which had the administration's desired effect of eliminating eligibility for most working families and helped set the stage for the separation of AFDC and wage supplementation. Wage supplements were resumed later in the Earned Income Tax Credit.
74. In order to be sure that you're really estimating the equation you want to estimate in a system of related equations, you ordinarily have to have some variables which are excluded from the equation you're interested in. These are called exclusion restrictions.
75. Timothy Besley and Ann Case, "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," working paper no. 4956, National Bureau of Economic Research, Cambridge, 1994. Data are from U.S. Department of Labor, Bureau of Labor Statistics, Statistical Abstract.
76. The federal share of the AFDC program (as well as the Medicaid program) is determined by the following formula: federal share = 1 - (state per capita income squared/national per capita income squared) × .45, with upper and lower limits of 50 percent and 83 percent. Several states were at the lower limit; none were at the upper. (U.S. House of Representatives, 1990). Data on per capita personal income are from the Survey of Current Business; data on the federal share are from U.S. House of Representatives, Committee on Ways and Means, Green Book.
77. James T. Patterson, America's Struggle Against Poverty: 1900-1985 (Cambridge, MA: Harvard University Press, 1986).
78. Data for 1980 and 1990 are from U.S. Department of Labor, Bureau of Labor Statistics, Statistical Abstract; years in between are the product of a linear interpolation. The percentage Black did not change by more than a few percentage points for any state in the 1980s.
79. Personal income was significant in the wage regression for more educated Whites, but it did not change the coefficients on the other variables substantially. The latter F test is the same one used by Besley and Case, "Unnatural Experiments."
80. John Bound, Regina Baker, and David A. Jaeger, "The Cure Can Be Worse than the Disease: A Cautionary Tale Regarding Instrumental Variables," National Bureau of Economic Research Technical Paper no. 137, June 1993.