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The Effect of the 1981 Omnibus Budget Reconciliation Act on Welfare Recipients and Work Incentives

Robert Moffitt and Douglas A. Wolf
Social Service Review
Vol. 61, No. 2 (Jun., 1987), pp. 247-260
Stable URL: http://www.jstor.org/stable/30011884
Page Count: 14
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Effect of the 1981 Omnibus Budget Reconciliation Act on Welfare Recipients and Work Incentives
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Abstract

The 1981 Omnibus Budget Reconciliation Act (OBRA) altered the Aid to Families with Dependent Children (AFDC) program in important ways, especially regarding the work incentives in the benefit formula. We use a set of data on AFDC recipients active just prior to OBRA to determine how recipients were affected by the legislation. We find that working recipients were very hard hit and that the "tax rate" implicit in the program rose to 78 percent. The introduction of a gross income screen contributed the most to eliminating workers from the rolls, while the elimination of the "30-and-one-third" deduction was most important in raising the tax rate.

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