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1096

QUARTERLY JOURNAL OF ECONOMICS

some college than in the full sample. For example, a one thousand dollar cut in taxes (or increase in tax credits) for high school dropout single women is predicted to increase their employment by 4.2 percentage points in a typical week and increase work at all during the year by 8.8 percentage points. The corresponding numbers for those with some college education are 1.8 percentage points and 2.1 percentage points. Many of the other policy vari- able derivatives also fall with increased education.23

G. Unemployment and Macroeconomic Conditions

Table IV also reports the coefcients on the state unemploy- ment rate and its interaction with a dummy variable for a single woman having children. The unemployment rate is strongly sig- nicant and implies that for single women without children a one percentage point increase in the unemployment rate is associated with a 1.0 percentage point decrease in employment in a typical week and a 0.8 percentage point decrease in work anytime during the year. On the other hand, the interaction of the unemployment rate with being a single mother is small and not signicantly different from zero. The point estimates imply that a one percent- age point increase in the unemployment rate is associated with only a 0.01 percentage point decrease in a typical week and 0.1 percentage point increase any time during the year in the employment of single mothers relative to single women without children. These coefcients indicate a strong and similar responsiveness of both groups of single women to the state of the macroeconomy. This result is favorable for the use of single women without children as a comparison group for single mothers.

H. Alternative Specications

Since many of the changes in policy, notably welfare reform, took place in recent years, and a well-publicized decline in the welfare rolls began in 1994, we reestimate the full sample speci-

  • cations of Table IV, dropping the years 1994 –1996 along with

the waiver variables (which are nearly always zero through 1993). The estimates from this shorter sample, which are re- ported in columns (1) and (5) of Table V, are very close to those

23. The derivatives might be lower for groups with higher levels of education, because their employment rates are higher, leaving less room for increases in employment. However, the drop in the magnitude of the policy variable deriva- tives with more education is greater than it is for other control variables such as the unemployment rate.

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