Welfare, Work Experience, and Economic Self-Sufficiency

The potential of former AFDC recipients to earn a living wage is central to the success of welfare-to-work programs. Previous studies have found that welfare recipients see little increase in their wages over time. Low wage growth could arise from either low returns to work experience or low levels of experience. This distinction is important for designing effective welfare policy. In the following paper, we estimate how wages grew with work experience between 1978 and 1992 for a national sample of women from the National Longitudinal Survey of Youth. We compare women who never received welfare with both short- and long-term recipients in order to see to what extent the rates of wage growth with work experience differ. We find that they differ very little. We use numerous specification checks to test the robustness of our results and find consistent evidence that the wages of AFDC recipients grew at a rate similar to those of non-recipients once work experience is taken into account