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TIME‐INCONSISTENCY AND WELFARE PROGRAM PARTICIPATION: EVIDENCE FROM THE NLSY *
Author(s) -
Fang Hanming,
Silverman Dan
Publication year - 2009
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2009.00559.x
Subject(s) - commit , counterfactual thinking , welfare , economics , national longitudinal surveys , survey of income and program participation , benchmark (surveying) , work (physics) , welfare reform , dynamic inconsistency , labour economics , microeconomics , psychology , computer science , social psychology , mechanical engineering , database , engineering , market economy , geodesy , geography
We empirically implement a dynamic structural model of labor supply and welfare program participation for agents with potentially time‐inconsistent preferences. Using panel data on the choices of single women with children from the National Longitudinal Surveys (NLSY) 1979, we provide estimates of the degree of time‐inconsistency, and of its influence on the welfare take‐up decision. With these estimates, we conduct counterfactual experiments to quantify a measure of the utility loss stemming from the inability to commit to future decisions, and the potential gains from commitment mechanisms such as welfare time limits and work requirements.