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Abstract

Regional economic growth based on private sector job creation is often proposed as a policy for reducing the incidence of regional unemployment, poverty and dependency. One factor that could limit the impact of economic growth on the employment and poverty status of an area's indigenous population is the area's public assistance system. This study evaluates the impact of recent changes in federal welfare legislation (HR 3982) on the work incentives and the poverty and dependency status of Delaware female household heads receiving Aid to Families with Dependent Children (AFDC) assistance. Specifically, the study estimates the implicit marginal tax rates that such household heads would face by accepting employment in private sector jobs to which they are potential entrants under the pre and post HR 3982 conditions. In addition, the study examines the effect of the HR 3982 changes on the poverty and dependency status of such households.

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