WELFARE AND THE LABOUR MARKET: A NEW FRONTIER FOR REFORM?

Public Lectures in Honour of the late Professor Fred Gruen

Professor Fred Gruen was Head of the Economics Program, Research School of Social Sciences, Australian National University from 1972-1986, and inaugural Director of the Centre for Economic Policy Research, 1980-1986. Fred made a significant contribution to Australian economic and public policy debate. His endowment to the ANU has led to the establishment of the FH Gruen Distinguished Fellowships for researchers in the fields of economic and welfare policy.

The lectures will be presented by FH Gruen Distinguished Fellows and Visiting Fellows in the Economics Program, Research School of Social Sciences.

The FH Gruen lectures are being organised in conjunction with the Graduate Program in Public Policy, ANU, as part of the elective Selected Themes in Public Policy.

Venue: GPPP Lecture Theatre, Sir Roland Wilson Building, McCoy Circuit, Australian National University (ANU Map Ref. Building 120)

Time: 5pm-6.30pm (1 hour lecture plus 30 mins discussion)

Lecture Program:

(Part 1 of a two-part lecture. See also Lecture 2, Wednesday 21 March)

Welfare Reform in the US: Objectives, structure, and potentials

Speaker: PROFESSOR ROBERT HAVEMAN, University of Wisconsin-Madison and Visiting Fellow, Economics Program, Research School of Social Sciences, ANU

Robert Haveman is John Bascom Professor of Economics and Public Affairs at the University of Wisconsin-Madison (USA). He has written extensively on the economics of social policy and welfare reform, including the determinants of children's success and human capital issues. He has been Coeditor of the American Economic Review, President of the International Institute of Public Finance, and Tinbergen Professor at Erasmus University Rotterdam.

Lecture Summary:
Welfare Reform in the US reflects a radical change in thinking about the social responsibility toward poor people. It has substituted 'work' for 'welfare', and has led to a sudden change in the environment for poor people, especially poor single mothers. The TANF legislation that forms the heart of this reform, has fascinated policymakers in a wide variety of other nations. In this two-part lecture, Professors Haveman and Wolfe (see Lecture 2) will describe the nature of the reform, and the welfare to work emphasis that it represents. The objectives of the reform, the form that it took, the changed incentives that it implies, and its effects on both the number of welfare recipients and the well being of poor people will be addressed.

Background Papers:

Authors	Title
Robert Haveman and Barbara Wolfe	The 1996 U.S. Welfare Reform: Objectives, Effects, and Lessons
Robert Haveman	Reducing Poverty while Increasing Employment: A Primer on Alternative Strategies, and a Blueprint

Chair: Professor Bob Gregory, Economics RSSS, ANU

Welfare Reform in the US: What have been its effects?

Speaker: PROFESSOR BARBARA WOLFE, University of Wisconsin-Madison and
Visiting Fellow, Economics Program, Research School of Social Sciences, ANU

Barbara Wolfe is Professor of Economics, Preventive Medicine, and Public Affairs at the University of Wisconsin-Madison and Research Affiliate, Institute for Research on Poverty. From 1994-2000 she was Director of the Institute for Research on Poverty. She has been a Fellow-in Residence at the Netherlands Institute for Advanced Study in 1996-97 and 1984-85, a Visiting Scholar at the Russell Sage Foundation in 1991-92, is a member of the National Bureau of Economic Research and has served on the executive committee of the American Economics Association. Professor Wolfe's primary fields of interest include health economics, the economics of poverty and social policy and public finance more generally.

Lecture Summary: see Lecture 1

Background Papers:

Authors	Title
Marcia Cancian, Robert Haveman, Thomas Kaplan, Daniel R. Meyer, Ingrid Rothe, and Barbara Wolfe with Sandra Barone	Before and After TANF: The Utilization of Noncash Public Benefits by Women Leaving Welfare in Wisconsin
Marcia Cancian, Robert Haveman, Daniel R. Meyer, and Barbara Wolfe	Before and After TANF: The Economic Well-Being of Women Leaving Welfare

Chair: Professor RG Gregory, Economics RSSS, ANU

The Direct and Indirect Effects of Unemployment on Poverty and Inequality

Speaker: PROFESSOR PETER SAUNDERS, FH Gruen Distinguished Fellow ANU and Director, Social Policy Research Centre, University of New South Wales

Professor Peter Saunders has been Director of the Social Policy Research Centre, University of New South Wales since 1987. His research interests include poverty and income distribution, social security analysis and comparative welfare state development, including in OECD countries and within East and South East Asia. He has worked at the OECD (1982-85) and as a consultant to the IMF, the UN's Economic and Social Commission for Asia and the Pacific (ESCAP), the International Social Security Association (ISSA) and the Asian Development Bank, working on issues of social security design and reform. He is currently the Chair of the Economics Panel and the Workshop Program Committees of the Academy of the Social Sciences in Australia and is Joint Director of an Academy Project on 'The Economic and Social Costs of Unemployment'.

Lecture Summary:
Undertaking research on the impact of unemployment on poverty and income distribution is complicated by several factors. These include the fact that unemployment is a stock variable that affects individuals, while poverty and the distribution of income are based on flow variables that affect the family or some related economic unit. Because of this, simple statistical relationships between these variables may not necessarily exist and the evidence bears this out. For example, it is possible that the unemployment of one individual may be compensated by the income of another in the same unit so that the unit as a whole can remain above the poverty line. More important than such effects, however, is the fact that the relationship between unemployment and poverty (or low income generally) is moderated by, and contingent upon, other aspects including the nature of the social security system and the broader trend in inequality. The influence of these factors is illustrated with reference to a range of recent international experience showing that unemployment and poverty do not always move together. This does not imply that the impact of unemployment on poverty and inequality can be ignored. There are very important indirect effects that operate through a range of mechanisms at the level of the individual, the family, the community and the nation as a whole. These effects include the impact of unemployment on psychological well-being, health, family life and the functioning of communities and their susceptibility to crime and other forms of exclusion. A range of research relating to these effects is discussed, drawing on research being undertaken on behalf of the Academy of the Social Sciences in Australia.

Chair: Professor Bruce Chapman, Centre for Economic Policy Research, ANU

The Social Safety Net and the Industrial Safety Net: Reflections of one of the 'Five Economists'

Speaker: PROFESSOR PETER DAWKINS, Director, Melbourne Institute

Peter Dawkins is the Ronald Henderson Professor and Director of the Melbourne Institute of Applied Economic and social Research at the University of Melbourne. He has been prominent in policy debates about unemployment and the tax and welfare system and in October 1998 was one of five prominent economists who sent a letter to the Prime Minister outlining a plan for substantially reducing unemployment. He was appointed to the Federal Government's Reference Group on Welfare Reform which presented its final report in August 2000.

Lecture Summary: In October 1998, Peter Dawkins was one of five economists* who wrote a letter to the Prime Minister recommending an approach to significantly reducing unemployment. The plan had five features, which will be revisited in this lecture.

A key thrust of the plan was the need to reform the relationship between the industrial safety net and the social safety net. This theme will be developed further in the lecture drawing on recent research and on the 'McClure Report' by the Reference Group on Welfare Reform of which Dawkins was a member. The case for a 'wage-tax trade-off' will be elaborated, as well as on-going reform of the income support system, and a systematic approach to labour market programs combining labour market assistance with welfare reform.

(*The others were John Freebairn, Ross Garnaut, Michael Keating and Chris Richardson.)

Background Papers:

Author	Title
Peter Dawkins	A Plan To Cut Unemployment in Australia: An Elaboration on the 'Five Economists' Letter to the Prime Minister, 28th October 1998
Peter Dawkins	Do We Need a Low Pay Commission in Australia?
Peter Dawkins	The Social Safety Net and the Industrial Safety Net: Reflections of one of the "Five Economists"
Peter Dawkins	Further References

Chair: Professor Bob Gregory, Economics RSSS, ANU

Why an Earned Income Tax Credit Program is a Mistake for Australia

Speaker: PROFESSOR PATRICIA APPS, FH Gruen Distinguished Fellow ANU and Faculty of Law, University of Sydney

Professor Patricia Apps has published in a wide range of fields in Public Economics. Her areas of specialisation include the analysis of tax policy, welfare programs, and pensions. She has also undertaken extensive theoretical and empirical research on modeling labour supply, saving behaviour and inequality within and across households. She is a major contributor to the new literature on the economics of the household.

Paper Summary: This paper analyses the implications for labour supply, saving and income distribution, of a propsed policy program involving the introduction of an Earned Income Tax Credit (EITC) program. The paper evaluates the program as a step towards a simple negative income tax with a flat rate on income below the current top rate. The study derives first the implications for the marginal and average tax rates on primary and secondary earners in the Australian tax system, and then shows that the policy is essentially paid for by two-earner housholds at around the median wage level. Drawing on recent empirical work, we show that the result of this is likely to be a fall in labour supply and saving. Thus there is reason to be critical of the impact of the policy both on economic growth and on equity of the income distribution.

Background Paper:

Author	Title
Patricia Apps	Why an Earned Income Tax Credit Program is a Mistake for Australia

Chair: TBA

Fertility, Dependency and Social Security

Speaker: PROFESSOR RAY REES, FH Gruen Distinguished Fellow ANU and
Public Finance Institute, University of Munich

Ray Rees is a Professor at the University of Munich, Germany, and at the University of York, UK. He works in the area of public finance and has been mainly engaged in applying models of multi-person households to issues in taxation and social policy, and in industrial economics, where his interests lie in issues of regulation and asymmetric information.

Lecture Summary: TBA

Chair: TBA

Does the Availability of High-Wage Jobs for Low-Skilled Men Afect Welfare Expenditures and Family Structure?

Speaker: PROFESSOR DAN BLACK, Centre for Policy Research, University of Syracuse and Visitor, Social Policy Evaluation, Analysis and Research Centre (SPEAR), RSSS, ANU

Paper Summary: Shocks to the coal and steel industries measure the effect of long-term changes in demand for low-skilled workers on welfare expenditures and family structure. The coal and steel industries have historically paid high wages to low-skilled men. The collapse of the steel and coal industries in the 1980s produced a substantial increase in welfare expenditures, and the coal boom of the 1970s produced an even more substantial reduction in welfare expenditures. Our analysis indicates about half of the reduction in welfare expenditures during the coal boom is due to a decline in single-parent households, providing evidence for the Wilkson-Neckerman marriage market hypothesis.

Background Papers:

Author	Title
Dan A. Black, Terra G. McKinnish, and Seth G. Sanders.	Are We Understanding the Impact of Economic Conditions on Welfare Rolls
Dan A. Black, Terra G. McKinnish, and Seth G. Sanders.	Does the Availability of High-Wage Jobs for Low-Skilled Men Affect Welfare Expenditures and Family Structure? Evidence form Shocks to the Steel and Coal Industries

Chair: TBA

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