Fredrik Andersson, Julia Lane, Erika McEntarfer
This study examines the effect of employer characteristics, types of coworkers, and residential location in promoting the advancement of Temporary Assistance for Needy Families (TANF) recipients in the labor market. It is the first to use new, large integrated employer-employee data, the Longitudinal Employer Household Dynamics (LEHD) data — with new measures of worker quality and firm pay premia — to examine labor market outcomes and provide evidence that proactive welfare agencies may use in decision making. The first part of the study examines changes in the low-wage labor market and finds that employment opportunities expanded in the low-wage labor market between 1997 and 2001, but that the growth in opportunities has not been associated with greater access to good wages. The second part of the study examines the effect of employer characteristics, types of coworkers, and residential location on TANF recipients' transition out of low-wage work and finds that the industries and firms for which workers work, the characteristics of their coworkers, and the neighborhoods in which they live all affect the likelihood of exit from low-wage status.