Can work alter welfare recipients' beliefs?

A common argument in support of work-based welfare reform is that exposure to work will lead welfare recipients to revise their beliefs about how they will be treated in the labor market. This paper explores the analytical and empirical basis for this argument. The difficulty in testing the assumption that work leads to a change in beliefs is that there is an inherent simultaneity between work and beliefs. Welfare recipients who work may have different beliefs because they learn about the world of work once they enter the labor market. Alternatively, welfare recipients who have a more positive view of work are the ones who are more likely to work. We use a unique data set that helps solve this simultaneity problem. We find that exogenous increases in work induced by an experimental tax credit led to the predicted change in beliefs among younger workers.