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Welfare Reform and the Labor Market

TitleWelfare Reform and the Labor Market
Publication TypeJournal Article
Year of Publication2018
AuthorsChan, MK, Moffitt, R
JournalAnnual Review of Economics
Type of ArticleReview
ISBN Number19411383 (ISSN)
Keywordschildcare reform, earnings subsidy, Labor supply, welfare reform

This article reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, as well as the related empirical literature. We first present the canonical labor supply model of a classical welfare program and then extend this basic framework to include in-kind transfers, incomplete take-up, human capital, preference persistence, and borrowing and saving. The empirical literature on these models is presented. The negative income tax, earnings subsidies, US welfare reforms with features that differ from those in other countries, and childcare reforms are then surveyed in terms of both the theoretical models and the empirical literature surrounding each. © 2018 by Annual Reviews. All rights reserved.