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The decline of welfare benefits in the U.S.: the role of wage inequality

Year: 1998

Type: article

Abstract: Welfare benefits in the U.S. have experienced a much-studied secular decline since the mid-1970s. We explore a new hypothesis for this decline related to the increase in wage inequality in the labor market and the decline of real wages at the bottom of the distribution: we posit that voters prefer benefits which are tied to low-skilled wages. We test the hypothesis using a 1969–1992 panel of state-level data. An additional contribution of our analysis is the use of General Social Survey data on voter preferences for welfare which we combine with Current Population Survey data to determine the voter in each state who has the median preferred welfare benefit level. Our analysis reveals considerable evidence in support of a role for declining real wages in the decline of welfare benefits.

Source: Journal of Public Economics

DOI: 10.1016/s0047-2727(98)00017-6

Authors: Robert Moffitt, David Ribar, Mark Wilhelm

Institutions: Johns Hopkins University, George Washington University, Indiana University – Purdue University Indianapolis

Language: English

Topic: Social Policy and Reform Studies

Subfield: Political Science and International Relations

Field: Social Sciences

Domain: Social Sciences

SDGs: Reduced inequalities, Decent work and economic growth, No poverty

Open Access status: hybrid

Estimated APC paid: $4,510