Determinants of Welfare Exit and Employment

Leaving welfare and employment are modeled and estimated simultaneously to determine which outcome has the greatest influence on the other. Wage outcomes and the relative influence of policy/economic versus demographic change in determining outcomes are also explored. Pooled cross-sectional data are used from six urban areas in six different states allowing a comparison across both economic and policy structures. It is found that employment has a greater impact on the probability of leaving than leaving has on the probability of employment. These results hold even when employment two years out is considered. In addition, policy/economic changes have had more of an influence in determining welfare exists than changes in the demograhics of the welfare recipients. The results also suggest that looking further out is necessary in order to obtain a better picture of the quality of an employment outcome. --------------------------Support from the W.E. Upjohn for Employment Research is gratefully acknowledged. This paper has benefited from comments from Shiferaw Gurmu and Jerry Olson and from the research assistance of Velma Zahirovic-Herbert.