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THE LABOR SUPPLY OF SINGLE MOTHERS

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period and the 1992 to 1996 period are also reported in Table VI. We estimate that the EITC and other tax changes increased weekly employment 4.4 percentage points and annual employ- ment 7.2 percentage points over the full period, with about 40 percent of this change occurring over the 1992 to 1996 subperiod. While these estimates are substantial, they bracket the EITC effects found by Eissa and Liebman [1996], and are smaller than those predicted by Dickert, Houser, and Scholz [1995] and Keane [1995]. 24

Changes in the maximum welfare benet and implicit tax rates and the Medicaid expansions account for between 10 and 16 percent of the increase in weekly employment and between 8 and 11 percent of the increase in annual employment over either period. The effect of the Medicaid expansions themselves is usu- ally small or negative. Conversely, the effects of welfare waivers appear to be substantial, with the estimates suggesting that policies instituted under waivers account for about 14 to 15 per- cent of the increase in employment over the full sample period and about 14 to 20 percent of the increase between 1992 and 1996 for both weekly and annual employment. In general, both job training and child care explain small parts of the employment increase, although in the case of weekly employment over the full period child care can account for about 10 percent of the increase.

Improved macroeconomic conditions increased employment for both single mothers and single women without children over the 1984 –1996 period. Because the above calculations are for single mothers compared with single women without children, unemployment is not given a share in the decomposition. In all of the employment probits the interaction of unemployment and being a single mother had an economically small and statistically insignicant effect. Changes in state unemployment rates are estimated to have increased the absolute level of employment of single mothers by 2.0 percentage points during a typical week

24. Eissa and Liebman [1996] found up to a 2.8 percentage point increase in participation due to TRA86 (which as we indicate in Section IV accounted for 43 percent of the 1984–1996 change in taxes). Keane [1995] predicted that the 1984–1996 changes will result in a 10.7 percentage point increase in participa- tion, while Dickert, Houser, and Scholz [1995] predicted that the 1993–1996 changes (39 percent of the full 1984–1996 change in taxes) would increase em- ployment of single parents by 3.3 percentage points. Experimental ndings such as those reported in Blank, Card, and Robins [2000] suggest substantial respon- siveness of welfare recipients and other low-income people to nancial incentives. These experimental results would need to be extrapolated to all single mothers and the EITC to provide comparisons.

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