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The intergenerational impact of reduced generosity in the social safety net

Suziedelyte, A. ORCID: 0000-0003-2420-9231 and Zhu, A. (2021). The intergenerational impact of reduced generosity in the social safety net. Journal of Economic Behavior and Organization, 192, pp. 1-24. doi: 10.1016/j.jebo.2021.09.034

Abstract

This paper provides new causal evidence on how a reduction in welfare cash assistance to newly separated parents impacts the parents themselves and their young-adult children. Our paper differs from the rest of the literature evaluating the intergenerational impacts of welfare policy because it focuses on the role of welfare assistance specifically at the point of parental relationship separation. A priori, it is unclear if a policy that provides welfare assistance to newly separated mothers produces work-disincentive effects and/or whether, on balance, it helps or hinders recovery from the event of separation. We use a reform that withdrew welfare eligibility from mothers who separated from their partners on or after 1 July 2006, while mothers who separated before this date were exempt from the new rules. We exploit this discontinuity in a Regression Discontinuity framework using biweekly administrative social security records. We find that the loss of welfare eligibility at the time of relationship breakdown reduces mothers’ welfare benefits, but increases their personal and family income. The reform is found to decrease young adults’ reliance on unemployment benefits, but this result is weaker and less robust. The effects on young adults’ receipt of other types of welfare payments, fertility, homelessness or financial independence cannot be identified precisely.

Publication Type: Article
Additional Information: © 2021. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/. This article has been published in Journal of Economic Behavior and Organization by Elsevier, DOI: https://doi.org/10.1016/j.jebo.2021.09.034
Publisher Keywords: Intergenerational impacts, Single parents, Welfare reform, Young adults
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HQ The family. Marriage. Woman
Departments: School of Arts & Social Sciences > Economics
Date available in CRO: 26 Oct 2021 08:42
Date deposited: 26 October 2021
Date of acceptance: 23 September 2021
Date of first online publication: 21 October 2021
URI: https://openaccess.city.ac.uk/id/eprint/26945
[img] Text - Accepted Version
This document is not freely accessible until 21 April 2023 due to copyright restrictions.
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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