Mixing Welfare and Work: Evidence from the PSID, 1980-87

Evidence from the Panel Survey of Income Dynamics (PSID) suggests that those with a history of mixing welfare and work are more likely to continue mixing rather than be in another welfare or labor market state. This finding supports the view that, without a welfare subsidy, jobs held by working welfare recipients will not provide for self sufficiency. We find no evidence supporting the notion that time spent mixing welfare and work alters individuals' tastes in favor of receiving AFDC (only) relative to working (only). Finally, as conventional theory suggests, the tax changes introduced by OBRA in 1981 discouraged the mixing of welfare and work.