Docstoc

Blank

Document Sample
Blank Powered By Docstoc
					What Did the 1990s Welfare
  Reform Accomplish?



           Rebecca M. Blank
            December 2003

     (A topic closely related to Gene
  Smolensky’s past research and concerns)
    What Did Welfare Reform Do?
 1996 legislation followed waiver
  experimentation
 Created TANF
     Funding stream, not a program
     Ended entitlements
     Block Grants

   Other provisions (immigrants, food
    stamps)
State Responses
   Welfare-to-work efforts
   Earnings disregard changes
   Sanctions enforcement
   Time limits establishment
   Few cash benefit changes
Result: State and federal welfare dollars for
  noncash assistance rose from 23% in 1997 to
  56% in 2002; proportion of money spent on
  direct cash assistance fell from 77% to 44%.
Other Program Changes
 Child care subsidies rose
 Declines in AFDC led to declines in
  Food Stamp and Medicaid usage
  (although other Medicaid changes
  had delinked it with cash assistance)
 EITC increases
 Minimum wage increases
Economic Changes Important
 Unemployment rates fell and stayed
  low
 Wages rose
                                                                                                    Figure 1
                                                                               Total AFDC/TANF Caseloads
                                           6,000,000
Number of Households Receiving AFDC/TANF




                                           5,000,000



                                           4,000,000



                                           3,000,000



                                           2,000,000



                                                                                                                 1996 Welfare Reform
                                           1,000,000



                                                  0
                                                   70

                                                          72

                                                                 74

                                                                        76

                                                                               78

                                                                                      80

                                                                                             82

                                                                                                    84

                                                                                                           86

                                                                                                                  88

                                                                                                                         90

                                                                                                                                92

                                                                                                                                       94

                                                                                                                                              96

                                                                                                                                                     98

                                                                                                                                                            00

                                                                                                                                                                   02
                                                 19

                                                        19

                                                               19

                                                                      19

                                                                             19

                                                                                    19

                                                                                           19

                                                                                                  19

                                                                                                         19

                                                                                                                19

                                                                                                                       19

                                                                                                                              19

                                                                                                                                     19

                                                                                                                                            19

                                                                                                                                                   19

                                                                                                                                                          20

                                                                                                                                                                 20
                                                                                                                Year

                                                  Note: 2003 data is through March of 2003.
                                                  Source: Website for Agency for Children and Families, Department of Health and Human Services (http://w w w .acf.dhhs.gov)
                                                                                   Figure 2
                                                                              Total Caseloads

                                           2,000,000

                                           1,800,000
Number of Households Receiving AFDC/TANF




                                           1,600,000

                                                                                                                      Waiver States
                                           1,400,000

                                           1,200,000
                                                                     Non-Waiver States

                                           1,000,000

                                            800,000

                                            600,000

                                            400,000

                                            200,000

                                                  0
                                                       -6   -4           -2                   0                  2                    4                       6
                                                                 Year Relative To Year of Implementation of Waivers or TANF

Source: March Current Population Survey and Table A1 from "The Effects of Welfare Policy and the Economic Expansion on Welfare Caseloads: An Update" by the
Council of Economic Advisers. August 3, 1999.
                                                                    Figure 3
                   Percent of Single Mothers Reporting Work During the Year

100%

                More than High School Diploma
90%

80%

70%         Only High School Diploma

60%

50%         No High School Diploma


40%

30%

20%

10%

 0%
   1988                 1990                 1992                 1994          1996   1998   2000   2002
                                                                         Year


   Source: Author's tabulations of the March Current Population Survey
                                                                           Figure 4
             Percentage of Single Mothers on Public Assistance in Previous Year
                               Who Report Working in March
45%


40%


35%


30%


25%


20%


15%


10%


5%


0%
  1990                    1992                 1994                  1996              1998   2000   2002   2004
                                                                                Year

      Source: Author's tabulation of the March Current Population Survey
                                              Table 1
                Single Mothers' Income Composition

                 Total                            Percent of Total Income
               Income
               (in 2000          Public                                   Other               Other
                dollars)       Assistance          Own Earnings          Earnings            Income


     1990      $18,563                23.08%              53.21%               4.30%            19.41%
     1991       18,383                   24.37              53.20                3.76             18.67
     1992       17,882                   23.22              52.73                3.50             20.55
     1993       18,401                   23.26              51.94                3.34             21.46
     1994       19,296                   20.06              54.73                3.78             21.43
     1995       20,523                   17.13              56.31                4.07             22.49
     1996       20,512                   15.43              57.98                4.16             22.43
     1997       20,979                   12.47              61.21                3.95             22.37
     1998       22,054                    9.37              64.93                4.43             21.27
     1999       23,498                    7.60              65.92                4.77             21.71
     2000       24,318                    5.74              68.39                4.54             21.33
     2001       25,195                    4.97              67.29                4.62             23.12



Note: Total income is the mean dollar value (in 2000 dollars) before taxes, and it does not include EITC
subsidies. Public Assistance is composed primarily of AFDC and TANF benefits and does not include
the inputed value of Food Stamps or Social Security Income.

Source: Author's tabulations of the March Current Population Survey
Key missing information in these
calculations:
 Work expenses
 Tax and transfer benefits
 Cross-household transfers
Did some groups gain more
than others?
                                                           Table 2
                       Changes Among Single Mothers: 1995 to 2001

                                               Earnings as a
                                                 share of                         Public                      Ratio of
                                                   Family          Change     Assistance as a     Change    Column (2)
                                                  Income         from 1995    share of Family   from 1995   to Column
                                                   (1995)          to 2001    Income (1995)       to 2001       (4)

Part 1.                                             (1)                (2)          (3)            (4)         (5)



All                                                0.564              0.110       0.171          -0.122       -0.903

By Education

No High School Diploma                             0.366              0.191       0.342          -0.224       -0.854

Only High School Diploma                           0.582              0.097       0.173          -0.115       -0.840

More than High School Diploma                      0.647              0.066       0.084          -0.066       -0.989



By Race

White (non-Hispanic)                               0.612              0.078       0.105          -0.077       -1.013

Black (non-Hispanic)                               0.529              0.149       0.232          -0.172       -0.868

Hispanic                                           0.479              0.160       0.284          -0.190       -0.841



By Age of the Youngest Child

No Preschooler                                     0.604              0.064       0.100          -0.070       -0.917

Preschooler(s) (less than 6)                       0.510              0.171       0.265          -0.186       -0.917

Infants(s) (less than 2)                           0.451              0.208       0.331          -0.229       -0.909

 Source: Author's tabulation of the March Current Population Survey
                                                              Table 2
                       Changes Among Single Mothers: 1995 to 2001

                                                                                                                Ratio of
                                                     Percent           Change                       Change    Column (2)
                                                     Working         from 1995    Percent on      from 1995   to Column
                                                     (1995)            to 2000   Welfare (1995)     to 2000       (4)

Part 2.                                                 (1)                (2)        (3)            (4)         (5)



All                                                   0.735            0.081         0.274         -0.175       -0.461

By Education

No High School Diploma                                0.487            0.160         0.465         -0.281       -0.568

Only High School Diploma                              0.752            0.059         0.272         -0.161       -0.367

More than High School Diploma                         0.854            0.037         0.173         -0.120       -0.307



By Race
White (non-Hispanic)                                  0.818            0.044         0.197         -0.130       -0.338

Black (non-Hispanic)                                  0.671            0.126         0.356         -0.229       -0.551

Hispanic                                              0.599            0.139         0.369         -0.236       -0.591



By Age of the Youngest Child

No Preschooler                                        0.808            0.035         0.188         -0.123       -0.285

Preschooler(s) (less than 6)                          0.646            0.133         0.381         -0.235       -0.567
Infants(s) (less than 2)                              0.560            0.163         0.425         -0.244       -0.665


      Source: Author's tabulation of the March Current Population Survey
                                                            Table 2
                           Changes Among Single Mothers: 1995 to 2001

                                                                                                                  Ratio of
                                                   Percent              Change                        Change    Column (2)
                                                Below Poverty         from 1995   Percent Working   from 1995   to Column
                                                 Line (1995)            to 2000       (1995)          to 2000       (4)

Part 3.                                               (1)                (2)            (3)            (4)         (5)



All                                                 0.402              -0.078         0.735          0.081        -0.970

By Education

No High School Diploma                              0.682              -0.105         0.487          0.160        -0.656

Only High School Diploma                            0.413              -0.053         0.752          0.059        -0.898

More than High School Diploma                       0.241              -0.054         0.854          0.037        -1.463



By Race
White (non-Hispanic)                                0.291              -0.045         0.818          0.044        -1.021

Black (non-Hispanic)                                0.510              -0.118         0.671          0.126        -0.934

Hispanic                                            0.566              -0.145         0.599          0.139        -1.043



By Age of the Youngest Child

No Preschooler                                      0.305              -0.047         0.808          0.035        -1.346

Preschooler(s) (less than 6)                        0.522              -0.106         0.646          0.133        -0.794
Infants(s) (less than 2)                            0.584              -0.098         0.560          0.163        -0.604


 Source: Author's tabulation of the March Current Population Survey
Did some groups gain more
than others?
   Little evidence that single mothers who were
    more disadvantaged in the labor market (I.e.
    lower skill; minority; younger children) had
    greater difficulty finding work. Striking similarity
    in changes between public assistance and
    income shares.
   More disadvantaged groups better able to
    increase their work share relative to their
    declines in welfare participation
   More disadvantaged groups had greater difficulty
    translating employment increases into poverty
    declines.
Welfare Leaver Studies
 Very useful descriptive information
 Not very useful in providing an
  overall evaluation of welfare reform.
  No information on other populations.
 Not useful in helping separate policy
  changes from other changes.
Regression Estimates from of
Existing National Data Samples
 Used to estimate caseload changes,
  employment changes, income
  changes, etc.
 Major reviews of these: Blank
  (2002), Grogger, Karoly and
  Klerman (2002)
 Most show BOTH policy and
  economy mattered; but large
  amounts unexplained
Particularly promising approaches

 Compare differential effects among
  more and less educated women
 Look at flows rather than levels in
  caseload change
 Find a good instrument for a policy
  effect (EX: Grogger’s use of age of
  children to study time limtis)
Yet, all of these estimation approaches have
limits – identification of a policy effect is
extremely difficult

 TANF was implemented everywhere
  within a year’s time.
 TANF implementation occurred as
  the economy boomed and EITC was
  expanded nation-wide
 Individual policy components within
  TANF are hard to code and not well
  identified either
Experimental Data
 Very effective for looking at single
  policy changes; less effective for
  evaluating multiple changes.
 No states are running post-waiver
  experiments on welfare reform
  programs.
    Key Results from Experiments
 Effectiveness of work-first programs
 Amazing results of financial
  incentive programs
    Can increase both earnings and income with
    combined incentives and mandates
   Effects of work pgms on children
What Big Questions About Welfare
Reform Remain Unanswered?
   Interpreting the Caseload Decline and
    Employment increase
•    Both changes were far greater than
    anyone would have predicted
•   Uncertainty about why such a large
    changes occurred
       * Synergies?
       * Behavioral shifts?
       * Misinformation?
What Big Questions About Welfare
Reform Remain Unanswered?
   The Effects of an Economic
    Slowdown in the new Policy Regime?
    So far very limited effects.
       * Is this the fulfillment of the
       promise of welfare reform?
       * Is this just a mild slowdown?
       * Are we missing key measures
       of economic pain?
What Big Questions About Welfare
Reform Remain Unanswered?
   Relation of Assistance Programs to
    Family Composition & Fertility
    Major goal of welfare reform, but
    timing of changes doesn’t match
    timing of policy change
    Current research investigating
    policy/marriage/fertility links is still
    limited and contradictory
                                                                                                                                    Figure 5
                                                                                                 Birth Rates for Unmarried Women, Age 15-44
                                                           100
Live Births to unmarried women per 1,000 unmarried women




                                                           90

                                                           80                                                                                                                         Black


                                                           70

                                                           60


                                                           50


                                                           40
                                                                                           All
                                                                                                                                                                             White
                                                           30


                                                           20

                                                           10


                                                            0
                                                                 1980          1982              1984         1986           1988           1990            1992           1994           1996               1998   2000
                                                                                                                                            Year

                                                             Source: Centers for Disease Control and Prevention. (2002). Births: Final data for 2000 (Table 18). National Vital Statistics Reports, 50(5).
Conclusions
 1996 legislation did constitute a
  major reform (this happens rarely)
 Transformation of the public
  assistance system is still a work-in-
  progress. The arguments between
  critics and supports remain very
  unsettled
 Role of economy remains key

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:35
posted:2/25/2012
language:English
pages:27