Do social policy reforms have different impacts on employment and welfare use as economic conditions change?

This paper uses March Current Population Survey data from 1985 to 2004 to explore whether social policy reforms implemented throughout the 1990s have different impacts on employment and welfare use depending on economic conditions, a topic with important policy implications but which has received little attention from researchers. I find evidence that many reforms operate differently as labor market conditions fluctuate. Although social policies increase employment during economic slowdowns, the largest effects are generated in favorable labor market conditions. The impact of time limits, mandatory job search, and cash diversion programs are particularly sensitive to the macroeconomy, while the earned income tax credit is associated with similar employment effects in most environments. The results vary substantially across policy “carrots” and “sticks,” levels of work intensity, and subsamples of single mothers, but a tentative conclusion is that a strong economy reinforces the positive incentives created by social policy reforms. © 2008 by the Association for Public Policy Analysis and Management.

Minimum wages and the economic well-being of single mothers

Using pooled cross-sectional data from the 1992 to 2005 March Current Population Survey (CPS), this study examines the relationship between minimum wage increases and the economic well-being of single mothers. Estimation results show that minimum wage increases were ineffective at reducing poverty among single mothers. Most working single mothers were not affected by minimum wage hikes because they already earned wages above state and federal minimum wages. And less-educated single mothers who were affected did not see a rise in net income because of negative employment and hours effects. For this low-skilled population, a 10 percent increase in the minimum wage was associated with an 8.8 percent reduction in employment and an 11.8 percent reduction in annual hours worked. © 2008 by the Association for Public Policy Analysis and Management