The Welfare Caseload, Economic Growth and Welfare-to-Work Policies: An Analysis of Five Urban Areas

Researcher(s):Peter R. Mueser, Julie L. Hotchkiss, Christopher T. King, Phillip S. Rokicki, and David W. Stevens
Date Published:
April 2000
Ray Marshall Center for the Study of Human Resources, The University of Texas at Austin

Abstract: This paper uses quarterly data on AFDC (later TANF) recipients in five major urban areas to examine the relative importance of policy reform and economic conditions in explaining the dynamics of the welfare caseload and the employment experiences of welfare leavers. We find that both increases in exits as well as reductions in entry to welfare played an important role in the caseload declines of the 1990s. However, in contrast to previous research, we find that economic conditions are less important in explaining the decline than policy or related changes.

Consistent with the welfare-to-work ideal underlying reform efforts, we find that welfare reforms were accompanied by substantial increases in the employment of those leaving welfare. However, this appears to be largely the result of an increasingly tight labor market rather than the reforms. We conclude that although an economic recession would not boost TANF caseloads to prior levels, it would seriously jeopardize the goal of increasing self-sufficiency of former welfare recipients through employment.


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