Does Welfare Participation Affect Women's Wages?

Objectives. This study examines how welfare participation and employment affect women's wages. Methods. We use longitudinal data from the 1996 Survey of Income and Program Participation and fixed-effects regression models to test our hypotheses. Results. Our results indicate that time spent on welfare while unemployed results in a wage penalty that is similar to the penalty associated with nonwelfare work breaks. Time spent on welfare while employed has no effect on wages, unlike the strong positive impact of nonwelfare work periods. Conclusions. Working while on welfare does appear to prevent further wage deterioration, but does not lead to substantial wage growth. [ABSTRACT FROM AUTHOR]