Report

Abstract

In this report the authors argue that welfare participation is more sensitive to economic conditions than previously believed. Why? Prior research focused on short-term economic fluctuations and ignored differences between high- and low-skilled workers. As welfare is long-term (i.e., permanent) it makes more sense to make comparisons with long-term economic trends. Also, since low-skilled workers are more likely to end up on welfare, it is proper to focus on their economic opportunities. Thus, the authors focus on the long-term impact of economic conditions on welfare participation, and they concentrate our analysis on low-skilled workers. Specifically, they analyze long-term changes in the supply of high-paying jobs for coal and steel workers as they affect certain heavy coal- and steel-producing regions of the United States during the 1970s and 1980s. The authors' findings indicate that welfare participation in these regions closely mirrors the long-term local availability of high-paying jobs for low-skilled workers. This has serious policy implications for the long-term success of welfare reform.