Article Abstract:
We analyze the importance of employment liability as a potential barrier to welfare reform. In particular, research linking wrongful termination doctrines to labor market outcomes is integrated with empirical analyses of welfare caseloads to obtain evidence of the likely importance of liability risk to the willingness of firms to hire welfare participants. Calculations suggest that liability concerns were probably not a major factor in past decisions about whether or not to hire AFDC recipients. Nationally, the elimination of tort liability for wrongful termination could have provided additional jobs for fewer than one percent of welfare recipients. However, with evolving court doctrines, liability risks could become more important in the future, especially in those state jurisdictions, such as California, where employers traditionally have faced the prospect of punitive damages for wrongful termination. (Reprinted by permission of the publisher.)
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Article Abstract:
Tanner and Moore (1995) calculate welfare equivalent wags for the six most common social programs for each of the 50 states and the District of Columbia. They assert that individuals who choose public assistance over work are responding rationally to incentives of the welfare system, but they offer no evidence. I present statistically significant support for Tanner and Moore's assertion. Among potential welfare recipients, a one dollar increase in the welfare equivalent wage is found to increase the welfare take-up rate by approximately 2.7 percentage points and decrease the labor force participation rate by approximately 2.5 percentage points. (Reprinted by permission of the publisher.)
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Article Abstract:
Over the past thirty years the number of Americans on welfare has increased by 460 percent, generating concern about both the monetary and social costs involved. Long-term welfare dependence produces adverse outcomes for many families by distorting incentives for work and marriage. Government programs to reduce welfare have focused on work and training programs to raise skills of welfare recipients, but these programs have not significantly reduced welfare participation. Policies to scale back welfare are essential for reducing welfare disincentives. New approaches to the delivery of education are viewed as an important preventive strategy. (Reprinted by permission of the publisher.)
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