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Civic Report
No. 17 July 2001


Gaining Ground? Measuring the Impact of Welfare Reform on Welfare and Work

ABOUT THE AUTHORS

June O’Neill is Wollman Professor of Economics at the Zicklin School of Business and Director of the Center for the Study of Business and Government, School of Public Affairs, at Baruch College, CUNY. She is also an Adjunct Scholar of the American Enterprise Institute in Washington, D.C. Between 1995 and 1999, Dr. O’Neill was on leave from Baruch College serving as Director of the Congressional Budget Office (CBO) in Washington. Earlier she held positions as Director of Policy and Research at the U.S. Commission on Civil Rights, senior economist on the President’s Council of Economic Advisors, senior research associate at the Urban Institute, and research associate at the Brookings Institution.

Dr. O’Neill received a Ph.D. in economics from Columbia University. She was elected Vice President of the American Economics Association in 1998. Her published research covers several areas including wage differentials by race and gender, health insurance, tax and budget policy, and social security. Her prior publications on welfare issues include Work and Welfare in Massachusetts: An Evaluation of the ET Program; Lessons for Welfare Reform: An Analysis of the AFDC Caseload and Past Welfare-to-Work Programs (with Dave M. O’Neill); and The Duration of Welfare Spells (with Laurie Bassi and Douglas Wolf).

M. Anne Hill is Professor of Economics and Chair of the Economics Department at Queens College, CUNY. She received her Ph.D. in economics from Duke University and has written on determinants of underclass behavior, social welfare policy, the education of girls and women in the developing world, the economics of disability and the Japanese labor market. With Thomas J. Main, she wrote Is Welfare Working? The Massachusetts Reforms Three Years Later (The Pioneer Institute, 1998).  Her work has been published in the American Economic Review, The Review of Economics and Statistics, and the Journal of Human Resources (among other journals). Professor Hill is a Senior Research Associate at the Center for the Study of Business and Government of Baruch College, CUNY.

AUTHORS’ ACKNOWLEDGEMENTS

The authors would like to thank faculty from Baruch College who provided helpful comments at the college’s School of Public Affairs seminar where we presented our research. We also thank Robert Michael, the dicussant of a paper by June O’Neill and Theresa Devine that was a precursor to this research, presented at the 1999 meetings of the American Economic Association, and participants who commented at a seminar at the Hoover Institution where early results were also discussed. We are grateful to Mei Liao and Wenhui Li for expert assistance with the extensive data analysis and other aspects of the research.

 


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WHAT THE PRESS SAID:

Welfare Reform Worked by June O’Neill, Wall Street Journal, 8-1-01
Surprise! The Welfare Reform Law Has Worked -- So Far,
Bloomberg.com, 8-8-01
Reform law helped reduce welfare rolls The Washington Times, 8-7-01
Pride in Welfare Reform, The Post and Courier (Charleston, S.C.), 8-3-01
Another Look at Reasons for Positive Welfare Report, San Jose Mercury News, August 1, 2001
Welfare Reform’s Latest ‘A’ New York Post, 8-1-01
Reliance on Welfare Windfall May Prove Costly for State and City, Report Warns New York Times, 7-31-01
Study praises welfare reform Chicago Tribune, 7-26-01

SUMMARY:
Gaining Ground? is a comprehensive study of the changes in welfare and work participation among single mothers since the implementation of welfare reform. Contrary to the claims and expectations of reform critics, this study finds that welfare participation has dropped 50 percent and employment has risen by a roughly equivalent amount between August 1996, when the reform legislation was passed, and September 2000, with disadvantaged mothers showing the greatest gains. Moreover, it finds that provisions of the welfare reform law were responsible for more than 50 percent of these advances, while less than 20 percent were the result of the economic boom of the late 90’s.

TABLE OF CONTENTS:

About the Authors

Authors’ Acknowledgements

Executive Summary

Introduction

A Brief History of Welfare Reform

Leaving Welfare, Going To Work: What The Data Show

Figure 1: Families Receiving AFDC/TANF, Years 1936–2000

Figure 2: Single Mothers Reduced Their Welfare Participation and Increased Their  Work Participation as Their Exposure to Welfare Reform Grew

A. Conceptual Issues

B. Data Sources

C. Single Mothers, Especially Disadvantaged Mothers, Have Left the Welfare Rolls  in Large Numbers

Age of Mother and Age of Youngest Child

Figure 3: The Decline in Welfare Participation is Largest for Single Mothers  in the Youngest Age Groups

Figure 4: The Decline in Welfare Participation is Largest for Single Mothers with Young Children

Schooling and Race

Figure 5: A Larger Welfare Decline is Observed for High School Dropouts

Figure 6: Welfare Participation Has Declined for All Race/Ethnicity Groups, but the Decline is Larger for Black and Hispanic Mothers

Marital Status

Figure 7: Welfare Participation Declined More for Never-Married Mothers Than for Previously Married Mothers

D. Single Mothers, Especially Disadvantaged Mothers, Greatly Increased  Their Work Participation

Marital Status

Figure 8: Single Mothers, Especially Never-Married Mothers, Experienced Greater Employment Gains Than Married Mothers

Age of Mother and Age of Youngest Child

Figure 9: Younger Single Mothers Made the Largest Employment Gains

Figure 10: Employment Increased the Most for Single Mothers with Young Children

Schooling and Race

Figure 11: Large Gains in Employment Made by the Least-Educated Mothers

Figure 12: Particularly Strong Employment Gains by Black and Hispanic Single  Mothers Have Narrowed Racial and Ethnic Employment Differentials

Summary on Changes in Welfare and Work

Welfare Reform is the Leading Cause of Recent Declines in Welfare  and Increases in Work

A. Research Strategy

B. Using Regression Analysis To Determine the Effect of TANF on Welfare  Participation and Work Participation

The Variables

Regression Results

Differences by Age Group

Table 1: Estimated Impact of Welfare Reform on the Percentage of Single Mothers Receiving Welfare and the Percentage Who Work

Differences by Education and Race

Table 2: Differences by Education in the Estimated Impact of Welfare Reform on  the Percentage of Single Mothers Receiving Welfare and the Percentage Who Work

Table 3: Differences by Race/Ethnicity in the Estimated Impact of Welfare Reform on  the Percentage of Single Mothers Receiving Welfare and the Percentage Who Work

C. Welfare Reform Is Responsible for Over Half of the Decline in Welfare  Participation Since 1996, and Over 60 Percent of the Rise in Work Participation

Table 4: The Contribution of Welfare Reform and the Decline in Unemployment to the Decline in Welfare Participation and the Increase in Work Participation of Single  Mothers by Age Group

Table 5: The Contribution of Welfare Reform and the Decline in Unemployment to the Decline in Welfare Participation and the Increase in Work Participation of Single  Mothers by Education

Table 6: The Contribution of Welfare Reform and the Decline in Unemployment to the Decline in Welfare Participation and the Increase in Work Participation of Single  Mothers by Race

Conclusion

Appendix A

Table A-1: AFDC/Waiver Policies Implemented in States

Table A-2: TANF Policies Implemented Between 1996 and 1998 by State

Appendix B: Data Issues: Caseload Data Versus the CPS

Figure B-1: Trends in the Number of Female Family Heads Receiving Welfare Are  Similar Under Different Definitions and Data Sources

Appendix C: Comparing the Characteristics of Welfare Recipients  and Other Women

Table C-1: Characteristics of All Women and Women with Children Under 18,  Ages 18–44, by Marital Status, Before and After Welfare Policy Changes

Table C-2: Characteristics of Single Mothers, Ages 18–44, by Their Welfare Status,  Before and After Welfare Policy Changes

Notes

 


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