The Effect of State Welfare Waivers on Family Earnings and Income Growth of AFDC Recipients, 1993-1995

SUMMARY

Many observers of welfare reform have argued that self-sufficiency on the part of welfare recipients is desirable. This would require, at least, that recipients' economic well-being not fall as a result of welfare reform. That question is addressed here by analyzing the impact of early state-level welfare waivers on the growth of earnings and income received by welfare recipients. Analysis of data from the Current Population Survey found that among welfare recipients (1) early work-related welfare reforms generally did not improve the growth in family earnings, and (2) waivers often had a small but negative effect on the growth of family income. Waivers were less detrimental for rural than for urban recipients. Since research has shown that rural employment and earnings generally lag behind urban areas, this is an interesting finding. It suggests that even though rural residents face greater barriers to employment, welfare reform has a smaller marginal effect on rural recipients.