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Manhattan Institute

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Issues 2016: Was Welfare Reform a Success?

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Issues 2016: Was Welfare Reform a Success?

June 21, 2016
EconomicsIncome Inequality
OtherPoverty

Abstract

Poverty among children—and female-headed families—is much lower today than in 1996, when President Clinton signed a historic welfare reform bill. This drop would not have happened without that law and the way it interacted with an expansion of work supports.

Key Findings

  • Welfare reform, in tandem with refundable tax credits for workers, helped to bring about a permanent, 10-percentage-point drop in child poverty.
  • Welfare reform accomplished this by moving female-headed families away from government benefits, instead of adding more families to the rolls.
  • Welfare-reform critics point to the dramatic decline in the welfare rolls over time to argue that the 1996 legislation was a mistake, but that misses the point: less poverty with lower welfare rolls should be the goal of antipoverty policy.

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