How Well Have Rural and Small Metropolitan Labor Markets Absorbed Welfare Recipients?. Employment and Wages

04/01/2001

In the 1993 to 1996 period, we estimated that, at the maximum, welfare reform could have accounted for employment growth of 0.1 to 0.8 percent, with an average of 0.4 percent. Presumably the contribution was generally less than the small maximums reported. Welfare reform could have reduced wage growth by as much 2.6 percent in one region, but the average estimate was only 1.4 percent. Again, in all likelihood the actual reductions in wage growth due to welfare reform were smaller.

In the 1996 to 1998 period, we estimated that, at the maximum, welfare reform could have accounted for employment growth of 0.5 percent to 2.8 percent, with an average of 1.3 percent. Welfare reform could also have reduced wage growth by as much 0.7 to 4.1 percent; the average estimate was only 2 percent. The actual increases in employment and reductions in wage growth due to welfare reform were presumably smaller than these maximum estimates.