Huffman, Sonya K.; Kilkenny, Maureen

Papers in Regional Science Vol. 86 no. 2 (June 2007)

This paper investigates regional variations in household welfare program and labor force participation behavior in the United States. A choice-theoretic model is developed and estimated for each of the major census regions (Northeast, Midwest, South and West) using cross-section data on households, labor markets, and state policies. We show how the observable heterogeneity across U.S. census regions explains different welfare program participation and workforce outcomes. We find little evidence of differences in behavior with respect to welfare program policies across regions. This finding undermines some of the efficiency rationale for the devolution of authority over welfare programs to the states. We also find evidence that welfare program participation still reduces labor supply in some regions. That finding supports the incentive rationale for the imposition of work requirements.