Marriage, Labor Supply And The Dynamics Of The Social Safety Net

The 1996 US welfare reform introduced time limits on welfare receipt. We use quasi-experimental evidence and a rich life-cycle model to understand the impact of time limits on different margins of behavior and well-being. We stress the impact of marital status and marital transitions on mitigating the cost and impact of time limits. Time limits cause women to defer claiming in anticipation of future needs and to work more, effects that depend on the probabilities of marriage and divorce. They also cause an increase in employment among single mothers and reduce divorce, but their introduction costs women 0.7% of lifetime consumption, gross of the redistribution of government savings.