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ERIC Number: ED467526
Record Type: Non-Journal
Publication Date: 2002-Apr
Pages: 81
Abstractor: N/A
Instrumental Variable Estimates of the Labor Market Spillover Effects of Welfare Reform. Upjohn Institute Staff Working Paper.
Bartik, Timothy J.
The labor market spillover effects of welfare reform were estimated by using models that pool time-series and cross-section data from the Current Population Survey on the state-year cell means of wages, employment, and other labor market outcomes for various demographic groups. The labor market outcomes in question are dependent variables that are related to control variables and the state's welfare caseload. A key feature of the analysis is that the endogeneity of caseloads is corrected for with a rich set of instrumental variables. State welfare caseloads are treated as endogenous, and 10 instrumental variables reflecting state welfare reform policies are used. The resultant estimates indicate significant spillover effects of welfare policies. Over the short term, welfare reforms reduce the wages of male high school dropouts, the wages of single mothers, and the employment of male high school dropouts. In the long run, more educated groups gain wage boosts because of welfare reform. Tables detailing the following items are appended: (1) logit estimates; (2) first-stage estimated coefficients for the instrumental variables, single mothers group, corresponding to second-stage equation with ln(Wage) dependent variable; (3) 2SLS coefficient estimates; and (4) simulated effects of welfare reform on various labor market outcomes. (Contains 30 references and 11 tables/figures.) (MN)
W.E. Upjohn Institute for Employment Research, 300 South Westnedge Avenue, Kalamazoo, MI 49007 ($3). Tel: 616-343-4330; Fax: 616-343-7310; e-mail:; Web site: For full text:
Publication Type: Reports - Research
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Upjohn (W.E.) Inst. for Employment Research, Kalamazoo, MI.