Monday, November 11, 2013

A Bit More Evidence Against the Dependency Thesis

Since this is a topic that's rather important to me I thought I'd post a link to a blog post from Economix examining the question about whether welfare programs erode the work ethic and increase dependency. As with any other evidence based approach to this topic, the answer is that they don't.

A few specific programs are mentioned. Regarding the EITC: "She noted that studies of the impact of the earned-income tax credit revealed a far stronger effect encouraging low-income parents to enter employment in the first place than its phaseout (the decline in benefit levels as earnings increase past a certain point) has in reducing work effort."

Of course, things would be even better if we didn't phase out the program, but according to those opposed to welfare this would break the budget, or something.

Another particularly important pro-work program is the child care subsidies from TANF:

Temporary Assistance for Needy Families (known as TANF) toward subsidized child care contributed to significant increases in the labor-force participation of single mothers between 1996 and 2000.
Unfortunately, in 2012, federal TANF money used for child care, including direct spending and transfers to the Child Care and Development Block Grant, reached their lowest level since 1998.
Recent cross-national research shows that women’s labor-force participation has increased more rapidly in recent years in countries with generous child care and other family-friendly policies than in the United States.
 Another big cliff often mentioned as a reason to oppose welfare regards Medicaid.

It is sometimes argued that the means-tested health benefits provided by Medicaid tempt workers to avoid or drop out of paid employment.
But analysis of a recent policy experiment in Oregon, where benefits were extended to a randomly selected group of low-income individuals, showed no statistically significant impact on their employment.

I encourage you to read the whole piece. As I've written before, if you want to examine the impact of welfare policies you need to realize that these policies will have both work increasing and work decreasing effects. These effects will vary based on an individual's characteristics. The net effect depends on the distribution of these traits in society. All of the evidence points to the idea that all but the worst designed welfare policies are net work encouraging, even if they do make some slackers into even bigger slackers. But these individuals are the least likely to be those who would make significant contributions to society under any policy regime, forcing a natural slacker to work results in nothing but a lazy, good for nothing worker who will quit as soon as their minimum needs are met. Welfare programs that reduce barriers to hard work, like child care, medical care, nutrition, and basic income (to reduce stress and to give people a feeling that their income gets them somewhere, any manager knows who important morale is to hard work and there is no reason to believe this doesn't apply at the population level) lead to greater work effort by the highest quality marginal workers who are both more productive workers and more numerous than the slackers that reduce work effort in response to welfare.

Yet, American right wingers are basically at war with the welfare state making baseless assertions about its impact on society. Furthermore, they reduce the effectiveness of welfare programs to elicit less work, the worst offender is Social Security disability which has the unrealistic and counter-productive requirement for virtually no paid labor. Other historical culprits were restrictions on AFDC which had strong negative impacts on the family, particularly black families, by their moralizing regulations which sought to enforce standards regarding breadwinner-homemaker families but instead encouraged single parents and co-habitation as well as reducing work efforts by single mothers (TANF solves the work effort of single mothers but continues to do a poor job supporting families, though it is better than AFDC particularly when combined with EITC).

Why is it that these folks remain mired in moralistic tales about the effects of state support when all the evidence contradicts them? How long can people hold on to these lies?

1 comment:

  1. This is a meme that only the guillotine managed to eradicate, for a while...