TIME‐INCONSISTENCY AND WELFARE PROGRAM PARTICIPATION: EVIDENCE FROM THE NLSY* |
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| Authors: | Hanming Fang Dan Silverman |
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| Affiliation: | 1. University of Pennsylvania, Duke University, U.S.A.;2. University of Michigan, U.S.A.;3. We are deeply indebted to Ken Wolpin for his advice and encouragement on this project. We also thank Steve Berry, John Bound, Raj Chetty, Stefano Della Vigna, Zvi Eckstein, Michael Keane, David Laibson, Donghoon Lee, Ulrike Malmandier, Robert Miller, Daniele Paserman, Andrew Postlewaite, Matthew Rabin, Mark Rosenzweig, John Rust, Kent Smetters, and participants at many seminars and conferences for helpful suggestions and discussions. Finally, we thank three anonymous referees for careful comments that much improved the article. We are responsible for the remaining errors and shortcomings. Please address correspondence to: Hamming Fang, Department of Economics, University of Pennsylvania, 3718 Locust Walk, Philadelphia, PA 19104‐6297. E‐mail: . |
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| Abstract: | We empirically implement a dynamic structural model of labor supply and welfare program participation for agents with potentially time‐inconsistent preferences. Using panel data on the choices of single women with children from the National Longitudinal Surveys (NLSY) 1979, we provide estimates of the degree of time‐inconsistency, and of its influence on the welfare take‐up decision. With these estimates, we conduct counterfactual experiments to quantify a measure of the utility loss stemming from the inability to commit to future decisions, and the potential gains from commitment mechanisms such as welfare time limits and work requirements. |
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