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A Model of the Marginal Labor Supply Response to Transfer Programs, with a Historical Illustration

Robert A. Moffitt & Matthew V. Zahn

Journal of Human Resources2026https://doi.org/10.3368/jhr.0225-14107r2article
AJG 3ABDC A*
Weight
0.50

Abstract

We estimate the effects of welfare program participation on the labor supply of those who are on the margin of participation. We develop a local IV method that can semiparametrically estimate the shape of the marginal labor supply response curve as participation grows and declines. In an application to the historical AFDC program and using an instrument for program participation costs, we estimate a quadratic curve, rising and then falling as participation rates rise The average work disincentive is modest in size but there are some margins where effects are sizable and some where it is effectively zero.

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https://doi.org/https://doi.org/10.3368/jhr.0225-14107r2

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@article{robert2026,
  title        = {{A Model of the Marginal Labor Supply Response to Transfer Programs, with a Historical Illustration}},
  author       = {Robert A. Moffitt & Matthew V. Zahn},
  journal      = {Journal of Human Resources},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.3368/jhr.0225-14107r2},
}

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A Model of the Marginal Labor Supply Response to Transfer Programs, with a Historical Illustration

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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