Title

Time-inconsistency and Welfare Program Participation: Evidence from the NLSY

Document Type

Discussion Paper

Publication Date

6-1-2004

CFDP Number

1465

CFDP Pages

49

Abstract

We empirically implement a dynamic structural model of labor supply and welfare program participation for agents with potentially time-inconsistent preferences. Using panel data on the choices of single women with children from the NLSY 1979, we provide estimates of the degree of time-inconsistency, and of its influence on the welfare take-up decision. With these estimates, we conduct counterfactual experiments to quantify the utility loss stemming from the inability to commit to future decisions, and the potential utility gains from commitment mechanisms such as welfare time limits and work requirements.

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