Labor force and welfare program participation: The effects of welfare

This research examines the quantitative impacts of welfare program characteristics and individual characteristics on both the labor force and welfare participation decisions of low-income females with children. The participation decisions are estimated jointly as a bivariate probit model using data derived from the U.S. Census Bureau's Current Population Survey for the years 1979 to 1990, inclusive. These data allow the estimation of the precise behavioral impacts of welfare. The main empirical findings are that effective welfare guarantee levels and the effective welfare tax rate on unearned income both significantly affect the probability of labor force and welfare program participation, but that such impacts are very small in magnitude, Implications for policy are discussed.