The 1993 EITC Expansion and Low-Skilled Single Mothers’ Welfare Use Decision
42 Pages Posted: 6 Apr 2011
Date Written: April 4, 2011
Abstract
Previous studies on low-skilled single mothers focus generally either on the binary welfare use or work decision. However, work among welfare participants has increased steadily since the mid 1990s. This study estimates role of the 1993 EITC expansion on the decline of welfare caseloads using a bivariate probit model. Using monthly SIPP information, I find that the 1993 EITC expansion has at least the same effect on reducing welfare use as the welfare reform initiatives. Moreover, the elasticity estimates indicate that single mothers, especially those who were not employed and dependent solely on welfare before the expansion, were the most responsive to the policy initiatives. Finally, the increase in work among welfare participants is due to the relative ineffectiveness of the policies in reducing the net population of those who are on welfare and work simultaneously.
Keywords: EITC Expansion, Welfare Use, Work, Single Mothers
JEL Classification: I38, J18, J22
Suggested Citation: Suggested Citation
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