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BRUCE D. MEYER AND DAN T. ROSENBAUM - page 45 / 52

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THE LABOR SUPPLY OF SINGLE MOTHERS

1107

c Income Taxes if Work is the weighted sum of income tax liabilities at the various annual earnings points using the wage/hours distributions described above as weights. c Welfare Benets if Work is the weighted sum of welfare benets at the various annual earnings points using the wage/hours distributions described above as weights. c Probability of AFDC if Work is the weighted sum of AFDC receipt at the various annual earnings points using the wage/hours distributions described above as weights. c Medicaid if Work is calculated in two steps. First, we calculate the weighted sum of Medicaid adults covered and Medicaid children covered at the various annual earnings points using the wage/hours distributions described above as weights. Second, we then multiply these sums by dollar expenditures separately for adults and children. In the main specications we use average expenditures over all states and years. c Welfare Maximum Benet is the welfare benet assuming zero earnings. We calculate AFDC monthly benets (AFDC) as follows (setting quantities in parentheses to zero if negative):

(A.1)

AFDC

min {MAXBEN, RR

[PS

BRR

(EI

DIS)]},

where

  • MAXBEN is the maximum benet,

  • RR is the ratable reduction,

  • PS is the payment standard (the dollar amount when

benets end not counting disregards),

  • BRR is the benet reduction rate,

  • EI is earned income, and

  • DIS is the earnings disregard.

We calculate Food Stamp benets in two steps (setting quantities in parentheses to zero if negative). First, we calculate the monthly shelter cost expense deduction (SED), and second, we calculate the monthly Food Stamp benet (FS):

(A.2)

SED

(min {SEDC, SE ((1

0.5 EIDP)

EI

AFDC

SD)}).

(A.3)

FS

(MB

0.3 ((1

EIDP)

EI

AFDC

SD

SED)),

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