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1066

QUARTERLY JOURNAL OF ECONOMICS

of the labor supply response is in the work decision rather than the hours decision. Furthermore, there is no work that we are aware of that assesses the overall effect of recent changes in training and child care programs.5 The work on the effects of welfare waivers has examined program caseloads rather than employment, and has reached conicting results.6

We examine the major policies affecting the labor supply of single mothers during the 1984 to 1996 period using two data sets, the Current Population Survey (CPS) Outgoing Rotation Group Files and the March CPS Files. By investigating several programs at once using thirteen years of individual data, we account for their separate effects, and we can directly compare the programs using the same sample, time period, and methods. Our approach improves on the common past research strategy of examining changes in one of these policies in isolation over a short time period or with a single cross section of data.

The estimates from our main specications suggest that the EITC and other tax changes account for over 60 percent of the 1984 –1996 increase in the weekly and annual employment of single mothers (relative to single women without children). Wel- fare waivers and other changes in AFDC account for smaller, but still large shares of the increase for both employment measures. Changes in Medicaid, training, and child care programs play a smaller role. Our estimated effects of tax and EITC changes are fairly robust across time periods and specications. We nd larger effects for less educated women, and smaller, but still substantial effects when we compare changes for single mothers with different numbers of children. Some of these identication strategies result in much weaker AFDC effects. The effects of other policies on employment tend not to vary much by specica- tion. Additionally, we nd that the effects of the policies on total hours worked are very similar to the employment results.

The structure of the paper is as follows. Section II provides a theory of the decision to work and states our main modeling choices. We describe the two data sets used in the empirical work in Section III. Section IV describes the main program changes

5. See Gueron and Pauly [1991] for a review of training programs for welfare recipients, and Council of Economic Advisers [1997] for a review of work on the effects of child care.

6. See Levine and Whitmore [1998], Martini and Wiseman [1997], Blank [1997], and Ziliak et al. [1997] for differing views of the relative importance of welfare waivers, economic conditions, and benet cuts in the recent decline in welfare receipt.

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