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Why Welfare Caseloads Fluctuate: A Review of Research on AFDC, SSI, and the Food Stamps Program

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  • Susan E Mayer

Abstract

This report reviews research on trends in the caseloads of three means-tested transfer programs in the United States: Aid to Families with Dependent Children (AFDC), Supplemental Security Income (SSI), and the Food Stamp Program (FSP). Trends in caseloads are the result of 1) program parameters and interactions between programs, 2) economic conditions, 3) norms and values, and 4) demographic characteristics. Most research tries to estimate the relative importance of the first two. The research suggests that all else equal, as welfare programs become more generous and easier to get caseloads increase. Caseload changes are also greatest when two or more of these four factors provide similar incentives for people to alter their behavior. For example, recent declines in AFDC and the FSP caseloads appear to be the result of the combined effect of the strong U.S. economy and policy changes that made work more available and more attractive compared to welfare. Similarly, program interactions are important. When programs provide opposing incentives, they reduce the behavioral response to either incentive, and when programs provide similar incentives, the behavioral response is greater than if only one program provided the incentive. Finally, incentives do not affect everyone in the same way. Program changes that benefit some recipients may hurt others. The research on caseloads has many limitations that reduce confidence in these estimated effects. The research is almost all based on reduced-form models, which tell us little about the causal mechanisms through which exogenous factors affect caseloads. The theory about these causal mechanisms is weak resulting in the possibility of mis-specification and many key variables are poorly measured or omitted.

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Bibliographic Info

Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 00/07.

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Length: 131 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:nzt:nztwps:00/07

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  13. Rebecca M. Blank, 2000. "What Causes Public Assistance Caseloads to Grow?," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 18, Northwestern University/University of Chicago Joint Center for Poverty Research.
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  17. Kathleen McGarry, 1996. "Factors Determining Participation of the Elderly in Supplemental Security Income," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 31(2), pages 331-358.
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  33. Christopher Jencks & Susan E. Mayer, . "Do Official Poverty Rates Provide Useful Information about Trends in Children's Economic Welfare?," IPR working papers, Institute for Policy Resarch at Northwestern University 96-1, Institute for Policy Resarch at Northwestern University.
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Cited by:
  1. Irvine, Ian & Finnie, Ross & Sceviour, Roger, 2005. "Social Assistance Use in Canada: National and Provincial Trends in Incidence, Entry and Exit," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2005245e, Statistics Canada, Analytical Studies Branch.
  2. Robert A. Moffitt & David W. Stevens, 2001. "Changing caseloads: macro influences and micro composition," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Sep, pages 37-51.
  3. Mueser, Peter R. & Stevens, David W. & Troske, Kenneth, 2007. "The Impact of Welfare Reform on Leaver Characteristics, Employment and Recidivism: An Analysis of Maryland and Missouri," IZA Discussion Papers 3131, Institute for the Study of Labor (IZA).
  4. Carrington, William J. & Mueser, Peter R. & Troske, Kenneth, 2002. "The Impact of Welfare Reform on Leaver Characteristics, Employment and Recidivism," IZA Discussion Papers 561, Institute for the Study of Labor (IZA).
  5. Irvine, Ian & Finnie, Ross & Sceviour, Roger, 2004. "La dynamique de l'aide sociale au Canada : le role des attributs individuels et des variables economiques et politiques," Direction des etudes analytiques : documents de recherche, Statistics Canada, Direction des etudes analytiques 2004231f, Statistics Canada, Direction des etudes analytiques.

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