Do State‐Customized TANF Work Policies Actually Reduce Unemployment?*

Abstract

Objectives This study seeks to test the impact of states’ worker supplement programs on the unemployment rates of low‐income females. Worker supplement programs were implemented to cover more needy people and to meet tougher work requirements in response to the enactment of Deficit Reduction Act of 2005. Methods We utilize a difference‐in‐differences method using panel data for 50 states over a nine‐year period (2005–2013). Results Our empirical analysis shows that states implementing worker supplement programs achieve lower unemployment among low‐income females compared with states that did not implement the programs. We also find that states with higher total taxable resources per capita have a negative association with unemployment rates of low‐income females, while a longer duration of a state's unemployment insurance program is positively related to the unemployment status of low‐income females. Conclusions States can effectively reduce the unemployment of low‐income females by reallocating Temporary Assistance for Needy Families and/or Maintenance of Effort funds and investing in worker supplement programs.

Replication of “Do state‐customized TANF work policies actually reduce unemployment?”

“…In 2005, the federal government enacted the Deficit Reduction Act, which created stricter requirements on state TANF programs, including more stringent work requirements (Parrot, Schott, and Sweeney 2007). Some states responded by creating WSPs, which provided former TANF recipients cash and noncash assistance aimed at helping them maintain employment (Kim and Berry 2019). According to Kim and Berry, 19 states enacted some version of a WSP between 2005 and 2013.…”

“…In Na Yeon Kim and Frances Stokes Berry's article "Do State-Customized TANF Work Policies Actually Reduce Unemployment?," the researchers attempt to determine if the implementation of Worker Supplement Programs (WSPs) caused the unemployment rate of low-income females to decrease (Kim and Berry 2019). Using a difference-in-differences model, they find that states that enacted WSPs attained about 18 percent fewer unemployed low-income females when compared with states that did not implement WSPs.…”