Volume 14, Number 1 (Winter) 1979
Levy, Frank. 1979. "The Labor Supply of Female Household Heads, or AFDC Work Incentives Don't Work Too Well." Journal of Human Resources 14(1):76-97.
This paper presents an approximate method for estimating the labor supply function of female household heads who may or may not be receiving Aid to Families with Dependent Children (AFDC). Estimation results indicate that any AFDC parameter change which increases a program's breakeven income will reduce expected hours of work in the population. In particular, liberalized work incentives may encourage current recipients to increase labor supply, but these increases will be more than offset by work reductions of former nonrecipients who are now attracted onto the program.
The author is Senior Research Associate, The Urban Institute. The work reported here is a revised version of work funded by the U.S. Department of Labor under research grant NO. 542-06-74-04. Since grantees conducting research and development projects under government sponsorship are encouraged to express their own judgment freely, this paper does not necessarily represent the official opinion or policy of the Department of Labor. I wish to thank my colleague, Michael Wiseman, for extensive discussion. Nick Barr, Daniel McFadden, and James Hosek provided helpful comments. Lawrence Wilson provided research assistance. Particular thanks go to Irwin Garfinkel and Larry Orr for sharing their data on state welfare systems, to Gerry Duguay for providing extensive programming, advice, and to Katharina Varney and Brenda Brown for typing assistance.
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