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Car Ownership and Welfare-to-Work

Abstract

This study examines the role of car ownership in facilitating employment among recipients under the current welfare-to-work law. Because of a potential problem with simultaneity, the analysis uses an instrumental variable constructed from insurance premiums and population density for car ownership. The data comes from a 1999-2000 survey of TANF recipients in the Los Angeles metropolitan area. The empirical results show a significant independent contribution of car ownership on employment. The presence of an observed ownership is associated with 12 percentage point increase in the odds of being employed. Moreover, the results indicate that lowering insurance premiums by $100 can increase the odds of employment by 4 percentage points. 

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