Volume 19, Number 1 (Winter) 1984
Wolf, Douglas A. 1984. “Changes in Household Size and Composition Due to Financial Incentives.” Journal of Human Resources 19(1):87-103.
Tax and transfer programs inevitably create incentives relating to the size and composition of households. Examples of such incentives are the “marriage penalty,” dependents exemptions, and the eligibility rules for categorical welfare programs. This paper notes that changes in transfer program parameters may encourage recipient households to “import” nonwage-earning individuals, especially children, and to “export” wage earners. Several hypotheses regarding the nature of such responses are derived and supporting evidence is obtained using data from three experimental income-maintenance programs.
The author is Senior Research Associate, The Urban Institute. This research was supported by the Office of Income Security Policy, U.S. Department of Health and Human Services, and The Urban Institute. The opinions and conclusions expressed in this paper are those of the author and do not represent the opinions of any agency of the United States government. An early version of this paper was presented at the 1980 meetings of the Society for the Study of Social Problems. Helpful comments have been received from Margaret Boeckmann, Gary Burtless, David Greenberg, Robert Hutchens, and the editors and referees. The assistance of Richard Natelson in preparing the Gary Income Maintenance Experiment data for analysis, Gary Burtless’s generous provision of data from the Seattle-Denver Income Maintenance Experiment, and the secretarial skills of Terri Murray are all gratefully acknowledged.
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