The Reversal of Favorable Child Living Arrangement Trends of the Late 1990s

During the late 1990s, there was a notable shift in child living arrangements toward two‐parent households and away from single parenthood. Whether due to economic factors, declining teen birth rates, welfare reform, or some other cultural cause or a combination of these factors, something happened in the 1990s that stabilized marriage rates and led to declines in single‐parent households. There was also considerable hope that the federal welfare reforms enacted in 1996 might be responsible for the change in these trends. However, since 2000, while the downward trend in teen births continues, the gains in percentage of children living with two parents have been virtually eliminated. This article carefully documents these recent trends, examines the relationship of recessions on child living arrangements, and concludes that it is impossible to disentangle the role of welfare reform from its broader economic, policy, and demographic context.     

The effects of welfare reform on the academic performance of children in low‐income households

During the 1990s, U.S. welfare policy underwent dramatic reforms aimed at promoting employment and reducing dependence. Although the immediate effects on adult labor supply and family income have been studied extensively, this paper is the first to evaluate the long‐run effects on children's well‐being. Using a decade of national math achievement data and controlling for contemporaneous changes in education policy and environment, we associate welfare reform with relative test score improvements for low‐income students. Greater gains occur in states with larger initial welfare caseloads and larger caseload reductions.© 2009 by the Association for Public Policy Analysis and Management.     

Does it pay to move from welfare to work?

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act requires welfare recipients to look for work and has made it more difficult for nonworking recipients to remain on the welfare rolls. In addition, the economic boom of the 1990s and changes in federal and state policies have raised the net income gain associated with moving from welfare to work. This paper analyzes data from a panel survey of single mothers, all of whom received welfare in February 1997. In 1999, those who left welfare and were working had a higher household income and lower poverty rate, experienced a similar level of material hardship, engaged in fewer activities to make ends meet, and had lower expectations of experiencing hardship in the near future than did nonworking welfare recipients. Estimations of fixed‐effect regressions of income that control for both observable and unobservable time‐invariant characteristics show that monthly net income increases by $2.63 for every additional hour of work effort. About 60 percent of the observed monthly income difference between wage‐reliant and welfare‐reliant mothers can be attributed to differences in their work effort. Thus, after welfare reform, it does pay to move from welfare to work. © 2002 by the Association for Public Policy Analysis and Management.     

A “third way” in welfare reform? Evidence from the United Kingdom

U.S. welfare reforms, whether promoting work first or human capital development, have had in common an emphasis on employment as the key to improving the life chances of children living in single‐mother families. We describe in this article a different type of reform—a “third way” in welfare reform. The welfare reforms carried out in the United Kingdom since the “New Labour” government of Tony Blair was elected in 1997 have included promotion of paid work, but alongside two other components—an explicit commitment to reduce and eventually eliminate child poverty, and a campaign against long‐term disadvantage under the label of tackling “social exclusion.” Welfare‐to‐work reforms promoting employment for single mothers have been active but not as punitive as in the United States. At the same time, the tax credit and cash benefit system has been radically overhauled, benefiting low‐income families with children, whether or not parents are working. Early indications suggest a more rapid fall in child poverty in the United Kingdom since its reforms began than in the United States since its reforms, and a faster rise in single‐mother employment. © 2004 by the Association for Public Policy Analysis and Management.     

State Fiscal Responses to Welfare Reform during Recessions: Lessons for the Future

The 1996 welfare reform transformed open-ended matching grants to states to fixed block grants. This article considers whether, given the new regime, states will be able and willing to meet the need for public assistance during recessions. The accumulation of large balances of unspent federal welfare funds helped states weather the first year or so of the current recession without having to cut programs for needy families. While new fiscal rules promoted positive reform during a period of economic prosperity, they may be leaving states and their most vulnerable citizens at serious risk as the economic and fiscal slowdown continues.     

Changes in living arrangements during the late 1990s: Do welfare policies matter?

Using data from the 1997 and 1999 National Surveys of America's Families, the authors examine the consequences of state welfare policies and practices on the living arrangements of low‐income families with children. Results from a multivariate difference‐in‐difference‐in‐differences model suggest that more effective collection of child support and family cap policies are correlated with declines in single parenting and increases in dual parenting. Other policies such as sanctions and special restrictions that apply to two‐parent families have no clear, consistent association with living arrangements. © 2004 by the Association for Public Policy Analysis and Management.     

The TANF/SSI connection

Interactions and overlap of social assistance programs across clients interest policymakers because such interactions affect both the clients' well-being and the programs' efficiency. This article investigates the connections between Supplemental Security Income (SSI) and Temporary Assistance for Needy Families (TANF) and TANF's predecessor, the Aid to Families with Dependent Children (AFDC) program. Connections between receipt of TANF and SSI are widely discussed in both disability policy and poverty research literatures because many families receiving TANF report disabilities. For both states and the individuals involved, it is generally financially advantageous for adults and children with disabilities to transfer from TANF to SSI. States gain because the federal government pays for the SSI benefit, and states can then use the TANF savings for other purposes. The families gain because the SSI benefits they acquire are greater than the TANF benefits they lose. The payoff to states from transferring welfare recipients to SSI was substantially increased when Congress replaced AFDC with TANF in 1996. States retained less than half of any savings achieved through such transfers under AFDC, but they retain all of the savings under TANF. Also, the work participation requirements under TANF have obligated states to address the work support needs of adults with disabilities who remain in TANF, and states can avoid these costs if adults have disabilities that satisfy SSI eligibility requirements. The incentive for TANF recipients to apply for SSI has increased over time as inflation has caused real TANF benefits to fall relative to payments received by SSI recipients. Trends in the financial incentives for transfer to SSI have not been studied in detail, and reliable general data on the extent of the interaction between TANF and SSI are scarce. In addition, some estimates of the prevalence of TANF receipt among SSI awardees are flawed because they fail to include adults receiving benefits in TANF-related Separate State Programs (SSPs). SSPs are assistance programs that are administered by TANF agencies but are paid for wholly from state funds. When the programs are conducted in a manner consistent with federal regulations, the money states spend on SSPs counts toward federal maintenance-of-effort (MOE) requirements, under which states must sustain a certain level of contribution to the costs of TANF and approved related activities. SSPs are used for a variety of purposes, including support of families who are in the process of applying for SSI. Until very recently, families receiving cash benefits through SSPs were not subject to TANF's work participation requirements. This article contributes to analysis of the interaction between TANF and SSI by evaluating the financial consequences of TANF-to-SSI transfer and developing new estimates of both the prevalence of receipt of SSI benefits among families receiving cash assistance from TANF and the proportion of new SSI awards that go to adults and children residing in families receiving TANF or TANF-related benefits in SSPs. Using data from the Urban Institute's Welfare Rules Database, we find that by 2003 an SSI award for a child in a three-person family dependent on TANF increased family income by 103.5 percent on average across states; an award to the adult in such a family increased income by 115.4 percent. The gain from both child and adult transfers increased by about 6 percent between 1996 (the eve of the welfare reform that produced TANF) and 2003. Using data from the Department of Health and Human Services' TANF/SSP Recipient Family Characteristics Survey, we estimate that 16 percent of families receiving TANF/SSP support in federal fiscal year 2003 included an adult or child SSI recipient. This proportion has increased slightly since fiscal year 2000. The Social Security Administration's current procedures for tabulating characteristics of new SSI awardees do not recognize SSP receipt as TANF We use differences in reported TANF-to-SSI flows between states with and without Separate State Programs to estimate the understatement of the prevalence of TANF-related SSI awards in states with SSPs. The results indicate that the absolute number of awards to AFDC (and subsequently) TANF/SSP recipients has declined by 42 percent for children and 25 percent for adults since the early 1990s. This result is a product of the decline in welfare caseloads. However, the monthly incidence of such awards has gone up-from less than 1 per 1,000 child recipients in calendar years 1991-1993 to 1.3 per 1,000 in 2001-2003 and, for adult recipients, from 1.6 per 1,000 in 1991-1993 to 4 per 1,000 in 2001-2003. From these results we conclude that a significant proportion of each year's SSI awards to disabled nonelderly people go to TANF/SSP recipients, and many families that receive TANF/SSP support include adults, children, or both who receive SSI. Given the Social Security Administration's efforts to improve eligibility assessment for applicants, to ensure timely access to SSI benefits for those who qualify, and to improve prospects for eventual employment of the disabled, there is definitely a basis for working with TANF authorities both nationally and locally on service coordination and on smoothing the process of SSI eligibility assessment. The Deficit Reduction Act of 2005 reauthorized TANF through fiscal year 2010, but with some rules changes that are important in light of the analysis presented in this article. The new law substantially increases effective federal requirements for work participation by adult TANF recipients and mandates that adults in Separate State Programs be included in participation requirements beginning in fiscal year 2007. Thus SSPs will no longer provide a means for exempting from work requirements families that are in the process of applying for SSI, and the increased emphasis on work participation could result in more SSI applications from adult TANF recipients.     

Are Parental Welfare Work Requirements Good for Disadvantaged Children? Evidence From Age‐of‐Youngest‐Child Exemptions

This paper assesses the impact of welfare reform's parental work requirements on low‐income children's cognitive and social‐emotional development. The identification strategy exploits an important feature of the work requirement rules—namely, age‐of‐youngest‐child exemptions—as a source of quasi‐experimental variation in first‐year maternal employment. The 1996 welfare reform law empowered states to exempt adult recipients from the work requirements until the youngest child reaches a certain age. This led to substantial variation in the amount of time that mothers can remain home with a newborn child. I use this variation to estimate the impact of work‐requirement‐induced increases in maternal employment. Using a sample of infants from the Birth cohort of the Early Childhood Longitudinal Study, the reduced form and instrumental variables estimates reveal sizable negative effects of maternal employment. An auxiliary analysis of mechanisms finds that working mothers experience an increase in depressive symptoms, and are less likely to breastfeed and read to their children. In addition, such children are exposed to nonparental child care arrangements at a younger age, and they spend more time in these settings throughout the first year of life.     

Packaging Support for Low‐Income Families: Policy Variation across the United States

This paper addresses a gap in state‐level comparative social policy research by analyzing policies that support low‐income families with children. Variation in state policy “packages” is measured by considering three characteristics of 11 social programs. Individual measures of policy are found to be weakly and inconsistently inter‐correlated at the state level, but when cluster analysis is used to analyze multiple dimensions simultaneously, five clusters or regime types are identified that have distinctive policy approaches. These range from the most minimal provisions, to conservative approaches emphasizing private responsibility, to integrated approaches that combine generous direct assistance with employment support and policies that enforce family responsibility. A comparison of a subset of programs at two points in time (1994 and 1998) suggests that states made substantial changes in cash assistance and taxation policies after the 1996 federal welfare reforms. The magnitude and direction of these changes remained consistent with the state clusters identified in 1994. © 2001 by the Association for Public Policy Analysis and Management.     

Comment on Jill Khadduri's “should the housing voucher program become a state‐administered block grant?” A housing voucher block grant is a bad idea

Abstract

Khadduri argues for a well‐designed voucher block grant, phased in over several years. But proposals under consideration are more likely to undermine the effectiveness of vouchers than address their limitations. The most important advantage of housing vouchers is that they give recipients the freedom to choose the kind of housing and the location that best meet their needs. Although the current program is not living up to its potential, strategies for making it work better can be implemented without a block grant. Supporters of block grants claim welfare reform as a model, but none of the factors that contributed to declining caseloads under Temporary Assistance to Needy Families apply to housing. The single biggest problem with the housing voucher program is that federal spending for affordable housing is woefully inadequate. Instead of addressing this issue, a block grant would make housing hardship a state rather than a federal problem.     

Partnering and Parenting in Poverty: A Qualitative Analysis of a Relationship Skills Program for Low‐Income,Unmarried Families

Since the mid‐1990s, the federal government has funded numerous relationship skills programs, including some specifically targeting low‐income, unmarried parents, in an effort to strengthen couples’ relationships and increase family stability. The previous research on the effectiveness of these interventions has revealed mixed results about whether such programs can improve the relationships of lower income couples who tend to experience lower relationship quality, lower marriage rates, and higher rates of relationship dissolution. This article draws on in‐depth qualitative data collected during an 18‐month ethnographic study of one federally funded relationship skills program for unmarried, low‐income couples expecting a new baby. Overall, though parents found the financial management lessons included in the classes only minimally useful, if at all, they found other aspects of the program particularly useful for three main reasons: (1) classes allowed parents to focus exclusively on their couple relationships in ways they rarely did otherwise; (2) program incentives helped parents make financial ends meet that month; and (3) parents learned that the challenges they personally experienced were often endemic to the romantic and co‐parenting relationships of unmarried parents who have few resources and experience more challenges that tend to undermine relationship quality, such as financial stress and relational ambiguity. Engaging with other couples around shared challenges normalized couples’ relationship problems and lessened the resentment and animosity that typically characterized their partner interactions. These findings have important implications for healthy marriage and relationship policy. Program developers should avoid lessons that imply low‐income, unmarried parents’ spending habits and family‐formation decisions are deficient. Interventions should instead encourage couples to discuss their shared challenges and minimize their tendency to individualize relational and financial strain.     

Administration, Governance, and Policy Tools in Welfare Policy Implementation

Landmark welfare reform legislation passed in 1996 has been operating by legislative extensions since its expiration in September 2002. At this writing, reauthorization has been derailed by controversy over various legislative proposals. In this article, we contribute to the welfare policy debate by studying the importance of specific policy tools and the role of public administration in the dramatic fall in welfare caseloads from 1996 to 2000. Using administrative and survey data on welfare programs in 44 states, we test our theory that caseload reduction is a function of administrative commitments, policy design, and administrative actions linked to five sets of governance variables: environmental factors, client characteristics, treatments, administrative structures, and managerial roles and actions. We find strong evidence that administrative action to move clients into work, coupled with administrative commitments, can provide important links between policy goals and policy outcomes.     

On the equity effects of taxing imputed rent: Evidence from Australia

Abstract

Taxation of net imputed rent from owner‐occupied housing (and mortgage interest deductibility) has been advocated in Australia on grounds of both efficiency and equity. The current tax system (no taxation or deductibility) favors owner‐occupied housing over business investments, and in the owner‐occupied sector it favors high‐income, low‐debt households over others. Nevertheless, imputed rent taxation has been criticized on the empirical grounds that its direct burden would fall more heavily on low‐income households than high‐income households.

Using micro‐level data from the 1986 Income Distribution Survey, we show that the burden does not fall more heavily on low‐income households when net imputed rent is included in owners’ incomes and when life cycle effects are controlled for. Moreover, for married couples aged 25 to 54, the taxation of imputed rental income would be not only progressive, but more progressive than the taxation of other household income.     

State and local governments: New initiatives in low‐income housing preservation

Abstract

Preservation of the federally assisted low‐income housing stock is a critical issue in housing policy for the 1990s. Most of the low‐income housing initiatives that emerged over the last decade at the local and state levels were in response to changing economies and housing markets, to shifts in composition of the low‐income population, and to cutbacks in federal housing assistance as well as potential losses in the federally assisted housing inventory. The expansion of housing initiatives at state and local levels has critical ramifications for federal housing policy. It is a challenge to the federal government, which has not undergone a similar dramatic change in housing assistance policies. A number of areas of a new “federal partnership” need to be explored.     

How fair? Changes in federal income taxation and the distribution of income, 1978 to 1998

In this paper, we determine how tax law and income distribution changes have separately contributed to the changes in tax progressivity over time, and also how a specific pre‐tax distribution of income affects the equalizing ability of a given tax change. We use information from the Current Population Survey for years that follow immediately after significant tax law changes or after the full enactment of these changes to measure the effect of income taxes on income distribution for selected years over the period 1978 to 1998. We find that, even when account is taken of the induced effect of changes in federal income tax laws on pre‐tax income, the individual income tax structure has been less successful in equalizing after‐tax income since the 1980s and into the early 1990s. We also find that a given tax law's equalizing effect on the distribution of income is significantly affected by the pre‐tax distribution of income. © 2005 by the Association for Public Policy Analysis and Management.     

The Impact of Earnings Disregards on the Behavior of Low‐Income Families

This paper investigates the impact of changes in earnings disregards for welfare assistance received by single mothers following welfare reform in 1996. Some states adopted much higher earnings disregards (women could work full‐time and still receive substantial welfare benefits), while other states did not. We explore the effect of these changes on women's labor supply and income using several data sources and multiple estimation strategies. Our results indicate these changes had little effect on labor supply or income. We show this is because surprisingly few women used the earnings disregards. We discuss several explanations for why this might occur.     

Transitions from AFDC to SSI before welfare reform

The Supplemental Security Income (SSI) and Aid to Families with Dependent Children (AFDC) programs serve populations with similar characteristics. SSI serves adults and children with disabilities who are in low-income families, and AFDC serves low-income families with children. Because of that overlap, policy changes in one program can affect the other. In 1996, Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act, which transformed AFDC into the Temporary Assistance for Needy Families (TANF) program. Many people have expected that implementing that welfare reform legislation would eventually increase SSI participation, for two reasons. First, TANF includes new work requirements and time limits that induce more AFDC/TANF recipients with disabilities to obtain SSI benefits. Second, the change in the funding mechanism--from open-ended funding on a matching basis for AFDC to cash assistance block grants for TANF--gives states a stronger incentive to shift welfare recipients to SSI. This article examines the interaction between the SSI and AFDC programs in the prereform period (1990 to 1996) and discusses the potential implications of welfare reform on that interaction. Using matched data from the Survey of Income and Program Participation and Social Security Administration (SSA) records, our analysis focuses on how the interaction of those programs affects young women (aged 18 to 40) and children (aged 0 to 17). We find a very strong link between AFDC and SSI for young women and children. Significant portions of young female and child SSI beneficiaries in the 1990-1993 period were in AFDC families or had received AFDC in the past. In addition, a substantial share of young women and children who received AFDC during that period eventually entered SSI. Because the SSI program is now serving a much larger population of families with young women and children than in the past, SSA might need to develop policies to better serve that group. The findings also suggest that the prereform period is a poor baseline against which to measure the impact of TANF, primarily because of the instability in programs and policies.     

The impacts of welfare reform on recipients of housing assistance

Abstract

This article uses data from randomized evaluations in Indiana and Delaware to address three questions: (1) Are welfare recipients who receive federal housing assistance less employable than recipients who do not? (2) How does the impact of welfare reform compare for families with and without housing assistance? (3) Does welfare reform increase or decrease the use of such assistance?

Although public housing residents may be more disadvantaged than welfare recipients who do not get housing assistance, voucher users and Section 8 project‐based recipients were not. Welfare reform had similar impacts on the earnings and welfare benefits of families that received housing assistance and those that did not. Where impacts did differ, they were larger for families receiving assistance. Welfare reform also reduced the receipt of housing assistance. Families that receive assistance appear to have less financial strain than families that do not, suggesting that assistance may increase overall financial stability.     

How welfare reform affects young children: Experimental findings from Connecticut—A research note

As welfare‐to‐work reforms increase women's labor market attachment, the lives of their young children are likely to change. This note draws on a random‐assignment experiment in Connecticut to ask whether mothers' rising employment levels and program participation are associated with changes in young children's early learning and cognitive growth. Children of mothers who entered Connecticut's Jobs First program, an initiative with strict 21‐month time limits and work incentives, displayed moderate advantages in their early learning, compared with those in a control group. A number of potential mechanisms for this effect are explored, including maternal employment and income, home environment, and child care. Mothers in the new welfare program are more likely to be employed, have higher income, are less likely to be married, have more children's books in their home, and take their children to libraries and museums more frequently. However, these effects explain little of the observed gain in child outcomes. Other parenting practices and the home's social environment do explain early learning, but these remained unaffected by welfare reform. © 2003 by the Association for Public Policy Analysis and Management     

Interstate Competition and Welfare Policy

In 1996, the federal government terminated the Aid to Familieswith Dependent Children (AFDC) program and replaced it withthe Temporary Assistance for Needy Families program (TANF).Many powers once held by the federal government are now beingused by state governments. Will welfare assistance be redesignedand expanded or will states "race to the bottom?" This issueis investigated by examining state welfare policy choices duringthe latter years of AFDC(1976–1994). Because each stateunder AFDC had the authority to set the level of its welfareguarantee for families that had no income, it is possible toestimate the effects of interstate competition on AFDC guaranteelevels. By estimating a spatial autocorrelation coefficientwhile controlling for theoretically relevant variables and statefixed effects, this study finds evidence that states are sensitiveto the welfare policies of their competitors.