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Welfare Reform and Asset Accumulation: Asset Limit Changes, Financial Assets, and Vehicle Ownership

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  • Yunju Nam

Abstract

Objective. Over the past decade, federal and state governments have substantially liberalized asset limits in welfare. This article examines whether this policy change promotes asset accumulation among the target population of actual and potential welfare recipients. Methods. Utilizing household data from the Panel Study of Income Dynamics as well as state data, this study employs a difference‐in‐difference approach in order to determine whether state asset limits affect the target population's financial and vehicle asset accumulation. This study develops a new policy measure that considers the time period following the adoption of liberalized asset limits. Results. Analysis results suggest that increased asset limits may have successfully encouraged the target population's asset accumulation. The earlier a state raised its asset limit, the more likely welfare recipients were to accumulate financial assets and to possess bank accounts. Conclusion. It is recommended to liberalize asset eligibility rules to promote long‐term economic advancement of poor households.

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  • Yunju Nam, 2008. "Welfare Reform and Asset Accumulation: Asset Limit Changes, Financial Assets, and Vehicle Ownership," Social Science Quarterly, Southwestern Social Science Association, vol. 89(1), pages 133-154, March.
    • Handle: RePEc:bla:socsci:v:89:y:2008:i:1:p:133-154
    DOI: 10.1111/j.1540-6237.2008.00525.x
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    1. Elliott, William & Rauscher, Emily & Nam, Ilsung, 2018. "Unequal returns: Intragenerational asset accumulation differs by net worth in early adulthood," Children and Youth Services Review, Elsevier, vol. 85(C), pages 253-263.
    2. Graff, Michelle & Pirog, Maureen, 2019. "Red tape is not so hot: Asset tests impact participation in the Low-Income Home Energy Assistance Program," Energy Policy, Elsevier, vol. 129(C), pages 749-764.
    3. , 2022. "Means-Tested Transfers, Asset Limits, and Universal Basic Income," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2022(10), pages 1-8, August.
    4. Jessica E Todd & Young Jo & James Richard Boohaker, 2019. "The Impact of Supplemental Nutrition Assistance Program Policies on Asset Holdings," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(2), pages 305-328, June.
    5. Miwa Matsuo & Hiroyuki Iseki, 2020. "Giving up Job Search Because I Don't Have a Car: Labor Market Participation and Employment Status Among Single Mothers With and Without Cars," Discussion Paper Series DP2020-07, Research Institute for Economics & Business Administration, Kobe University.
    6. Leah Hamilton, 2021. "Asset Limits in Public Assistance and Savings Behavior Among Low‐Income Families," Social Science Quarterly, Southwestern Social Science Association, vol. 102(1), pages 454-467, January.
    7. Terri Friedline & Ilsung Nam, 2014. "Savings From Ages 16 to 35: A Test to Inform Child Development Account Policy," Poverty & Public Policy, John Wiley & Sons, vol. 6(1), pages 46-70, March.
    8. Leah Hamilton, 2016. "Incentives in the Temporary Assistance for Needy Families Program: A Review of the Literature," Poverty & Public Policy, John Wiley & Sons, vol. 8(2), pages 141-149, June.
    9. Elliott, William & Friedline, Terri & Nam, Ilsung, 2013. "Probability of living through a period of economic instability," Children and Youth Services Review, Elsevier, vol. 35(3), pages 453-460.
    10. Lorien Rice & Cynthia Bansak, 2014. "The Effect Of Welfare Asset Rules On Auto Ownership, Employment, And Welfare Participation: A Longitudinal Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 306-333, April.
    11. Leah Hamilton & Ben Alexander-Eitzman & Whitney Royal, 2015. "Shelter From the Storm," SAGE Open, , vol. 5(1), pages 21582440155, February.
    12. Elliott, William & Destin, Mesmin & Friedline, Terri, 2011. "Taking stock of ten years of research on the relationship between assets and children's educational outcomes: Implications for theory, policy and intervention," Children and Youth Services Review, Elsevier, vol. 33(11), pages 2312-2328.
    13. Petit, Gillian & Tedds, Lindsay M., 2021. "The Effect of Asset Thresholds on Income Assistance Flows in British Columbia," MPRA Paper 110447, University Library of Munich, Germany.
    14. Leah Hamilton & David Rothwell & Jin Huang & Yunju Nam & Taylor Dollar, 2019. "Guarding Public Coffers or Trapping the Poor? The Role of Public Assistance Asset Limits in Program Efficacy and Family Economic Well‐Being," Poverty & Public Policy, John Wiley & Sons, vol. 11(1-2), pages 12-30, July.
    15. Deokrye Baek & Christian Raschke, 2016. "The Impact of SNAP Vehicle Asset Limits on Household Asset Allocation," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 146-175, July.
    16. Lewis, Melinda & Cramer, Reid & Elliott, William & Sprague, Aleta, 2014. "Policies to promote economic stability, asset building, and child development," Children and Youth Services Review, Elsevier, vol. 36(C), pages 15-21.
    17. Haotian Zheng & Elizabeth Harris & William Elliott & Megan O’Brien, 2023. "The Role of Children’s Savings Accounts in Promoting Savings for College Among Welfare Recipients: The Case of Harold Alfond College Challenge (HACC)," Journal of Family and Economic Issues, Springer, vol. 44(2), pages 285-296, June.

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