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Welfare recipient work choice and in-kind benefits in Washington state

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We analyze the work choice of welfare recipients. Potential welfare recipients compare their on and off welfare utility from after-tax income and in-kind benefits via employment or welfare, and choose whether to work. Our null hypothesis, which we reject, is that benefits affect only the decision to work or not, not the hours worked, which will depend on wages. Using Temporary Assistance for Needy Families (TANF) administrative data from Washington state, we find that employer provided health insurance and child care subsidies significantly raise exit rates of TANF recipients and induce greater work effort. Other work inducing factors include wages and the Earned Income Tax Credit, while increased levels of Medicaid, Food Stamps and the income guarantee increase welfare dependency.

Document Type: Research Article


Affiliations: 1: ERS Group, Tallahassee, FL 32303, USA 2: School of Business Administration, Gonzaga University, Spokane, WA99258, USA 3: School of Economic Sciences, Washington State University, Pullman, WA99164-6210, USA 4: Department of Economics, North Carolina A&T University, Greensboro, NC 27214, USA

Publication date: 2007-05-01

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