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| Author: | Moffitt, R. Ribar, D. Wilhelm, M. |
| Title: | The decline of welfare benefits in the U.S. : the role of wage inequality |
| Journal: | Journal of Public Economics
1998 : JUN, VOL. 68:3, p. 421-452 |
| Index terms: | USA SOCIAL SECURITY WELFARE PAY DIFFERENTIALS INEQUALITY |
| Language: | eng |
| Abstract: | Welfare benefits in the U.S. have experienced a much-studied secular decline since the mid-1970s. In the paper, a new hypothesis for this decline is explored related to the increase in wage inequality in the labor market and the decline of real wages at the bottom of the distribution. It is posited voters to prefer benefits which are tied to low-skilled wages. The hypothesis is tested using a 1969-1992 panel of state-level data. An additional contribution of the analysis of the paper is the use of General Social Survey data on voter preferences for welfare which is combined with Current Population Survey data to determine the voter in each state who has the median preferred welfare benefit level. The analysis in the paper reveals considerable evidence in support of a role for declining real wages in the decline of welfare benefits. |
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