Skip to main content

Demographic behavior and the welfare state

Econometric issues in the identification of the effects of tax and transfer programs

Abstract

The evaluation of the effects of tax and transfer programs on demographic behavior raises a number of difficult econometric issues related to identification of program effects. The main issue concerns whether there exists the true exogenous variation in program parameters necessary to estimate the effects of the program on behavior. This paper provides a discussion of the types of exogenous variation that are commonly available as well as the pitfalls in using potentially endogenous sources of variation. The general points are illustrated with an example drawn from the demographic literature in the United States. The paper concludes with a recommendation that the source of exogenous variation in program parameters be carefully examined in any study undertaken.

This is a preview of subscription content, access via your institution.

References

  • Cain G, Wissoker D (1988) Marital breakups in the Seattle-Denver income maintenance experiment: a different conclusion. Discussion Paper 870–888, Institute for Research on Poverty, University of Wisconsin, Madison, Wisconsin

    Google Scholar 

  • Danziger S, Jakubson G, Schwartz S, Smolensky E (1982) Work and welfare as determinants of female poverty and household headship. Q J Econ 97:519–534

    Google Scholar 

  • Ellwood D, Bane M (1985) The impact of AFDC on family structure and living arrangements. Res Labor Econ 7:137–207

    Google Scholar 

  • Gustafsson B (1984) Macroeconomic performance, old age security and the rate of social assistance recipients in Sweden. Euro Econ Rev 26:319–338

    Google Scholar 

  • Heckman J, Robb R (1985a) Alternative methods for evaluating the impact of interventions. In: Heckman J, Singer B (eds) Longitudinal analysis of labor market data. Columbia University Press, New York, pp 156–245

    Google Scholar 

  • Heckman J, Robb R (1985b) Alternative methods for evaluating the impact of interventions: An overview. J Economet 30:239–267

    Google Scholar 

  • Hoffman S, Duncan G (1988) A comparison of choice-based multinominal and nested logit models: the family structure and welfare use decisions of divorced or separated women. J Hum Res 23:550–562

    Google Scholar 

  • Hutchens R (1979) Welfare, remarriage, and marital search. Am Econ Rev 69:269–379

    Google Scholar 

  • Moffitt R (1983) An economic model of welfare stigma. Am Econ Rev 73:1023–1035

    Google Scholar 

  • US Department of Health and Human Services. Final report of the Seattle-Denver income maintenance experiment, vol. 3. Government Printing Office, Washington, DC

Download references

Author information

Authors and Affiliations

Authors

Additional information

Presented at the Second Annual Conference of the European Society for Population Economics, University of Mannheim, June 23–25, 1988. The author would like to thank the participants of the conference for their comments and, in particular, Bjorn Gustafsson, Siv Gustafsson, and Denis Kessler for their information on Swedish and French tax and transfer programs. Joseph Hotz also provided useful comments.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Moffitt, R. Demographic behavior and the welfare state. J Popul Econ 1, 237–250 (1989). https://doi.org/10.1007/BF00166066

Download citation

  • Received:

  • Accepted:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF00166066

Keywords

  • General Point
  • Welfare State
  • Main Issue
  • Exogenous Variation
  • Program Effect