Welfare Reform: Effects of a Decade of Change

Welfare Reform: Effects of a Decade of Change

Welfare Reform: Effects of a Decade of Change

Welfare Reform: Effects of a Decade of Change

Synopsis

During the 1990s the United States undertook the greatest social policy reform since the Social Security Act of 1935. In Welfare Reform: Effects of a Decade of Change, Jeffrey Grogger and Lynn Karoly assemble evidence from numerous studies, including nearly three dozen social experiments, to assess how welfare reform has affected behavior. To broaden our understanding of this wide-ranging policy reform, the authors evaluate the evidence in relation to an economic model of behavior. The evidence they collect reveals the trade-offs that policymakers face in achieving the conflicting goals of promoting work, reducing dependency, and alleviating need among the poor. Finally, the authors identify numerous areas where important gaps remain in our understanding of the effects of welfare reform.

The book will be a crucial resource for policy economists, social policy specialists, other professionals concerned with welfare policy, and students.

Excerpt

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 fundamentally changed the cash welfare system in the United States. It eliminated the Aid to Families with Dependent Children (AFDC) program, replacing it with Temporary Assistance for Needy Families (TANF). It abolished the entitlement status of welfare, provided states with strong incentives to impose time limits, and tied funding levels to the states' success in moving welfare recipients into work.

By now much has been written about some of the apparent consequences of welfare reform. It is well known that caseloads plummeted during the 1990s and that employment rates of single mothers—the primary recipients of welfare in the United States—rose almost as fast. What remains controversial is how much of that transformation really stemmed from policy changes and how much resulted from other influences such as the boom economy of the late 1990s. We evaluate the evidence both on these questions and on other critical topics such as the effects of welfare reform on earnings, income, family structure, and the well-being of children.

The initial impetus for our work came in 2000 when the U.S. Department of Health and Human Services (DHHS) asked the RAND Corporation to review all of the studies that analyzed the causal effects of welfare reform. In the course of that project we made two key realizations that eventually led to this book. The first was that the policy changes stemming from welfare reform greatly expanded our opportunities to understand how low-income families respond to economic incentives. Under AFDC, the main difference among the states' welfare programs was the basic level of generosity (that is, the size of the cash grant). Economic theory predicts that behavior should vary with the level of generosity, and a fair amount of research was directed toward testing that prediction. Under TANF, state welfare programs vary to a much greater degree. Differences in generosity remain, but they are now accompanied . . .

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