Was it the economy or reform that precipitated the steep decline in the US welfare caseload?

Abstract

Objectives of the 1996 overhaul of the US welfare system included reducing dependency, raising employment and de-incentivizing out-of-wedlock fertility. Using public use state-level panel data from 1990 to 2005, I analyse how state implementation of welfare reform simultaneously affects the caseload, employment and out-of-wedlock births (henceforth, Temporary Assistance for Needy Families (TANF) objectives). Because endogeneity and simultaneity could not be rejected, I use Three-Stage Least Squares (3SLS) method. Results indicated that most of the steep decline in the caseload is attributed to welfare reform, while the economy's overall effect paled in comparison. However, lagged and contemporaneous unemployment individually ranked second and third behind the Hispanic share of state population. The conservative tilt over the period studied ranked forth, followed in declining order by full family sanctions, Earned Income Tax Credit (EITC) payments, time limits (lagged by length), access to abortion clinics, lump-sum TANF diversion payments, and TANF benefit payments. Findings also suggest that policy does not always work as intended: caseloads are found to be higher in states that have highly regarded family formation and job retention TANF programs; and EITC payments are associated with lower not higher caseloads. The most compelling finding in this study is that low-income families likely turn first to unemployment insurance and then to TANF assistance.

Three Essays on Social Assistance in Canada: A Multidisciplinary Focus on Ontario Singles

“…In contrast to Gabel (2010, 2013), my results do not find an association between administrative rules in Ontario and caseloads in that province. But like Berg and Gabel (2010;2013) my results do find a negative association between administrative changes in British Columbia and caseloads in that province. Unlike Arnau, Crémieux and Fortin (2005) and Berg and Gabel (2013) my results do not suggest that SA benefit levels are positively associated with caseloads.…”

“…For well over a decade after the passage of that legislation, welfare caseloads were generally on a downward trend, prompting researchers to ask: what factors were most responsible for this reduction in caseloads? Thus, researchers-most using variations of the theoretical and empirical models sketched in the previous sections-have devoted considerable effort to trying to understand the extent to which the PRWORA, statespecific policies and macroeconomic factors, respectively, have affected caseloads(Snarr, 2013). But this research has not dealt with singles without dependents-in part because, as previously noted, singles without dependents are not eligible to receive lastresort social assistance in most American states.…”

Evaluating evolutionary changes in state TANF policies

“…A variable corresponding to each metric was collected from publicly available sources. Snarr's (2013) caseload index is used to measure welfare dependency (CASES). Employment-to-population ratio (EPR) and marriage rate (MAR) of women living at or below 150% of the poverty line are computed using data from Integrated Public Use Microdata Series-Current Population Survey (IPUMS-CPS).…”

Determinants of social assistance caseloads for employable single adults without dependants in Canada

“…Thus, researchers have devoted considerable effort to trying to understand the extent to which the PRWORA, statespecific policies and macroeconomic factors, respectively, have affected caseloads (Snarr, 2013). But this research has not dealt with single employable adults without dependants-in part because, as noted above, single employable adults without dependants are not eligible to receive SA in most American states.…”