An Empirical Analysis of Joint Decisions on Labor Supply and Welfare Participation

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2004-05-01
Authors
Kang, Gi Choon
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Jensen, Helen
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Huffman, Sonya
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Center for Agricultural and Rural Development

The Center for Agricultural and Rural Development (CARD) conducts innovative public policy and economic research on agricultural, environmental, and food issues. CARD uniquely combines academic excellence with engagement and anticipatory thinking to inform and benefit society.

CARD researchers develop and apply economic theory, quantitative methods, and interdisciplinary approaches to create relevant knowledge. Communication efforts target state and federal policymakers; the research community; agricultural, food, and environmental groups; individual decision-makers; and international audiences.

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Economic and welfare program factors affect the well-being of low-income families and their labor supply decisions. This study uses data from the U.S. Survey of Income and Program Participation. A nested logit model is estimated to explain the joint decisions to participate in Temporary Assistance for Needy Families (TANF) and the labor market for the population of families potentially eligible for TANF. The empirical findings indicate that higher wages increase labor and decrease welfare program participation; an increase in nonlabor income decreases both labor market and welfare participation.

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