Giuseppe Sorrenti, University of Amsterdam

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Melbourne Institute Seminar

Title: Welfare, Workfare and Labor Supply: A Unified Evaluation (with Francesco Agostinelli and Emilio Borghesan)

Abstract: We analyze the extent to which labor supply responds to incentives created by social programs in the United States. We find new evidence of highly elastic labor supply for single mothers. We reconcile previous studies by showing how the difference-in-differences design fails to identify a meaningful treatment parameter in the context of the welfare-to-workfare transition in the 1990s. Finally, we use our quasi-experimental estimates to identify a structural model of labor supply with multiple tax and transfer programs. Model counterfactuals show that the EITC’s effect on labor supply depends on the regime of taxes and transfers in place.

Presenter: Giuseppe Sorrenti, University of Amsterdam

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