IRP Discussion Paper Abstracts - 2008

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On-the-Job Search, Minimum Wages, and Labor Market Outcomes in an Equilibrium Bargaining Framework

Christopher Flinn and James Mabli

Full Text: DP 1337-08

We look at the impact of a binding minimum wage on labor market outcomes and welfare distributions in a partial equilibrium model of matching and bargaining in the presence of on-the-job search. We use two different specifications of the Nash bargaining problem. In one, firms engage in a Bertrand competition for the services of an individual, as in Postel-Vinay and Robin (2002). In the other, firms do not engage in such competitions, and the outside option used in bargaining is always the value of unemployed search. We estimate both bargaining specifications using a Method of Simulated Moments estimator applied to data from a recent wave of the Survey of Income and Program Participation. Even though individuals will be paid the minimum wage for a small proportion of their labor market careers, we find significant effects of the minimum wage on the ex ante value of labor market careers, particularly in the case of Bertrand competition between firms. An important futures goal of this research agenda is to develop tests capable of determining which bargaining framework is more consistent with observed patterns of turnover and wage change at the individual level.

Childlessness and the Economic Well-Being of Elders

Robert D. Plotnick

Full Text: DP 1336-08

Using the Health and Retirement Survey, this study examines the relationship between childlessness and four indicators of elders’ economic well-being: income, receipt of disability and income-tested benefits, and wealth. The study estimates separate models for currently married persons, currently single women, and currently single men using standard OLS and logit, quantile regression, linear and logit random effects, and two propensity score models. Compared to married parents, childless married couples tend to have slightly more income and about 5 percent more wealth. Unmarried childless men enjoy no income advantage over unmarried fathers, but have 24–35 percent more wealth. Childlessness has the strongest relationship with unmarried women’s economic well-being. Compared to elderly unmarried mothers, unmarried childless women have, on average, 13–31 percent more income and about 35 percent more wealth. The strength of these relationships tends to increase as one moves up the distribution of income or wealth, especially for unmarried women. Childless unmarried men are more likely to use income-tested benefits while childless unmarried women are less likely to do so.

Temporary Help Service Firms’ Use of Employer Tax Credits: Implications for Disadvantaged Workers’ Labor Market Outcomes

Sarah Hamersma and Carolyn Heinrich

Full Text: DP 1335-08

Temporary Help Services (THS) firms are increasing their hiring of disadvantaged individuals and claiming more subsidies for doing so. Do these subsidies—the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW)—create incentives that improve employment outcomes for THS workers? We examine the distinct effects of THS employment and WOTC/WtW subsidies using administrative and survey data. Results indicate that WOTC/WtW-certified THS workers have higher earnings than WOTC-eligible but uncertified THS workers. However, these workers have shorter job tenure and lower earnings than WOTC/WtW-certified workers in non-THS industries. Panel estimates suggest that these effects do not persist over time.

Welfare Reform: The U.S. Experience

Robert Moffitt

Full Text: DP 1334-08

The reform of the cash-based welfare program for single mothers in the US which occurred in the 1990s was the most important since its inception in 1935. The reforms imposed credible and enforceable work requirements into the program for the first time, as well as establishing time limits on lifetime receipt. Research on the effects of the reform have shown it to have reduced the program caseload and governmental expenditures on the program. In addition, the reform has had generally positive average effects on employment, earnings, and income, and generally negative effects on poverty rates, although the gains are not evenly distributed across groups. A fraction of the affected group appears to have been made worse off by the reform.

Human Services Systems Integration: A Conceptual Framework

Thomas Corbett and Jennifer L. Noyes

Full Text: DP 1333-08

It is generally believed that the existing human services structure is most accurately described as an array of potentially related programs that deliver distinct benefits or services to narrowly defined target populations. Each program can be thought of as representing a service silo: a separate and distinct funnel through which money, regulations, and professional norms, and expectations flow. While some overlap across silos has always existed, each usually operates in a relatively self-contained manner. As a whole, the configuration of services available to support and assist families in their efforts to become self-sufficient can be complex, confusing, redundant, and incoherent. The opposite of this silo-based approach to organizing and delivering human services is often coined ‘systems integration.’ What exactly is systems integration? Building on lessons learned from the field, the authors conclude that, although it is not possible to create one all-encompassing definition of ‘service integration,’ it is possible to develop an overarching, conceptual framework for understanding and analyzing the essential process involved in such efforts to simplify and transform the service experience of target populations. This paper identifies the heterogeneity that exists across these efforts and from it develops a set of organizing principles and constructs for planning a service integration initiative. First, it elaborates on two key dimensions—relationship intensity and institutional similarity—critical for understanding any particular integration effort. Second, it proposes a strategy for framing integration efforts based on these two dimensions. Third, it considers the implications of this framework for developing an integration agenda. Finally, it identifies the basic components of all integration efforts within the context of a dynamic, rather than static, operating environment.