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Tuesday, November 11, 2008

Short-Sighted?

According to this research, welfare reform caused adult women to reduce their education:

Welfare reform undermined, Free Exchange: Getting poor mothers off welfare and into employment as quickly as possible seems to be a useful policy goal. But a new paper by economists Dhaval Dave, Nancy E Reichman, and Hope Corman suggests it can be short-sighted.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 limited the time mothers could spend on welfare and required some work as a condition for receiving it. The reforms were, by most measures, successful at reducing the number of women on welfare and increasing their levels of employment. ... But..., the authors ... found that the reforms made adult women less likely to pursue education.

The reforms do not penalise minor (under 18) women who still attend school. Actually, the reforms encourage the younger women to finish their education. To receive some of the government funds, single, minor mothers must attend high school or some training program. The authors found this incentive decreased the teen dropout rates of the population between 9 and 13%.

By contrast, the reforms aimed at adult women, which promoted work and not training, made education less attractive. The authors found the reforms decreased the probability of adult women attending high school or college by 20 to 25%.

The number of welfare claims unambiguously decreased, but at what cost? More education increases the value of your human capital which leads to higher wages and more self-sufficiency. The authors wonder if discouraging education might ultimately leave the women more dependent on state benefits than they would if education were encouraged. The trade-off is a classic example of the choice of short-term gain and long-term pain.

    Posted by on Tuesday, November 11, 2008 at 12:24 AM in Academic Papers, Economics, Social Insurance | Permalink  TrackBack (0)  Comments (18)

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