Abstract

AbstractMost works that have been done concerning the effects on work effort of the income based phase‐out of assistance programs have been specific to one program or another. Most theorists believe, however, that the primary issue is the marginal tax rates faced by those facing the phase‐out of several programs at once. This paper examines data from the Current Population Survey from 1993‐2006 and the first four phases of the Survey of Income and Program Participation from 1993, 1996 and 2001 to study the effect on hours worked for those losing benefits from several different programs as a percentage of additional income and in particular to look for a delayed effect. It finds a small but significant effect and also finds evidence that the effect is partially delayed as recipients become aware of their own marginal tax rates slowly over time.

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