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Welfare Reform and Changes in the Economic Well-Being of Children

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Author Info
Neil G. Bennett
Hsien-Hen Lu
Younghwan Song
Abstract

Since the implementation of the Temporary Assistance for Needy Families program in late-1996, welfare rolls have declined by more than half. This paper explores whether improvements in the economic well-being of children have accompanied this dramatic reduction in welfare participation. Further, we examine the degree to which the success or failure of welfare reform has been shared equally among families of varying educational background. We analyze data from the March Current Population Surveys over the years 1988 through 2001. Specifically, we link data for families with children who are interviewed in adjacent years and determine whether their economic circumstances either improved or deteriorated. We use two alternative approaches to address this general issue: a variety of regression models and a difference-in-differences methodology. These approaches provide consistent answers. In a bivariate framework TANF is associated with higher incomes; but this association becomes insignificant in the presence of business cycle controls. We also determine that children who were poor at an initial time period benefit differently, depending on their parents' educational attainment level. Poor children with parents who do not have a high school degree are significantly worse off in the TANF era, relative to the era prior to welfare reform, than are their more educated counterparts.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9399.

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Date of creation: Dec 2002
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Handle: RePEc:nbr:nberwo:9399

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I3 - Health, Education, and Welfare - - Welfare and Poverty

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Robert F. Schoeni & Rebecca M. Blank, 2000. "What Has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure," Working Papers 00-02, RAND Corporation Publications Department. [Downloadable!]
    Other versions:
  2. Adrian Mander & David Clayton, 2000. "Hotdeck imputation," Stata Technical Bulletin, StataCorp LP, vol. 9(51). [Downloadable!]
  3. Peracchi, Franco & Welch, Finis, 1995. "How representative are matched cross-sections? Evidence from the Current Population Survey," Journal of Econometrics, Elsevier, vol. 68(1), pages 153-179, July. [Downloadable!] (restricted)
    Other versions:
  4. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
  5. Brigitte C. Madrian & Lars John Lefgren, 1999. "A Note on Longitudinally Matching Current Population Survey (CPS) Respondents," NBER Technical Working Papers 0247, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September. [Downloadable!] (restricted)
  7. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  8. Kazumitsu Nawata & Nobuko Nagase, 1996. "Estimation of sample selection bias models," Econometric Reviews, Taylor and Francis Journals, vol. 15(4), pages 387-400. [Downloadable!] (restricted)
  9. Dan Lichter & Leif Jensen, 2000. "Rural America in Transition: Poverty and Welfare at the Turn of the 21st Century," JCPR Working Papers 187, Northwestern University/University of Chicago Joint Center for Poverty Research.
  10. Robert A. Moffitt, 1999. "The Effect of Pre-PRWORA Waivers on AFDC Caseloads and Female Earnings, Income, and Labor Force Behavior," JCPR Working Papers 89, Northwestern University/University of Chicago Joint Center for Poverty Research.
  11. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
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  12. Finis Welch, 1993. "Matching the Current Population Surveys," Stata Technical Bulletin, StataCorp LP, vol. 2(12). [Downloadable!]
  13. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-61, April.
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  14. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  15. White, Halbert, 1982. "Maximum Likelihood Estimation of Misspecified Models," Econometrica, Econometric Society, vol. 50(1), pages 1-25, January. [Downloadable!] (restricted)
  16. Laura Stander Connolly, 2000. "The Effect of Welfare Reform on the Incomes and Earnings of Low-Income Families: Evidence from the Current Population Survey," JCPR Working Papers 181, Northwestern University/University of Chicago Joint Center for Poverty Research.
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  1. Marianne Bitler & Jonah Gelbach & Hilary Hoynes, 2003. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," NBER Working Papers 10121, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Hsien-Hen Lu & Julian Palmer & Younghwan Song & Mary C. Lennon & J. Lawrence Aber, 2004. "Children facing economic hardships in the United States," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 10(11), pages 287-338, June. [Downloadable!]
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