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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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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2000/00-07/twp00-07.pdf
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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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Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
Phone: +64-4-472 2733
Fax: +64-4-473 0982
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References

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  1. David T. Ellwood, 1999. "The Impact of the Earned Income Tax Credit and Social Policy Reforms on Work, Marriage, and Living Arrangements," JCPR Working Papers 124, Northwestern University/University of Chicago Joint Center for Poverty Research.
  2. Rebecca M. Blank, 1999. "What Goes Up Must Come Down? Explaining Recent Changes in Public Assistance Caseloads," JCPR Working Papers 78, Northwestern University/University of Chicago Joint Center for Poverty Research.
  3. David N. Figlio & James P. Ziliak, 1999. "Welfare Reform, the Business Cycle, and the Decline in AFDC Caseloads," JCPR Working Papers 77, Northwestern University/University of Chicago Joint Center for Poverty Research.
  4. Johanne Boisjoly & Kathleen Mullan Harris & Greg J. Duncan, . "Initial Welfare Spells: Trends, Events, and Duration, with Implications for Welfare Reform," IPR working papers 96-22, Institute for Policy Resarch at Northwestern University.
  5. Bertrand, M. & Luttmer, E.F.P. & Mullainathan, S., 1998. "Network Effects and Welfare Cultures," Papers 201, Princeton, Woodrow Wilson School - Public and International Affairs.
  6. Jane Waldfogel & Susan E. Mayer, 1999. "Male-Female Differences in the Low-Wage Labor Market," JCPR Working Papers 70, Northwestern University/University of Chicago Joint Center for Poverty Research.
  7. Rebecca M. Blank, 2000. "What Causes Public Assistance Caseloads to Grow?," JCPR Working Papers 18, Northwestern University/University of Chicago Joint Center for Poverty Research.
  8. Saul D. Hoffman & E. Michael Foster, 2000. "AFDC Benefits and Nonmarital Births to Young Women," Journal of Human Resources, University of Wisconsin Press, vol. 35(2), pages 376-391.
  9. Anne E. Winkler, 1991. "The Incentive Effects of Medicaid on Women's Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 308-337.
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  11. John M. Fitzgerald, 1995. "Local labor markets and local area effects on welfare duration," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(1), pages 43-67.
  12. Fraker, Thomas & Moffitt, Robert, 1988. "The effect of food stamps on labor supply : A bivariate selection model," Journal of Public Economics, Elsevier, vol. 35(1), pages 25-56, February.
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  14. O'Neill, June A & Bassi, Laurie J & Wolf, Douglas A, 1987. "The Duration of Welfare Spells," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 241-48, May.
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  16. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
  17. Janet Holtzblatt & Robert Rebelein, 2000. "Measuring the Effect of the EITC on Marriage Penalties and Bonuses," JCPR Working Papers 127, Northwestern University/University of Chicago Joint Center for Poverty Research.
  18. Susan E. Mayer & Christopher Jencks, 1989. "Poverty and the Distribution of Material Hardship," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 88-114.
  19. 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.
  20. David T. Ellwood, 1986. "Targeting "Would-Be" Long-Term Recipients of AFDC," Mathematica Policy Research Reports 652, Mathematica Policy Research.
  21. Robert Moffitt, 1987. "Historical Growth in Participation in Aid to Families with Dependent Children: Was There a Structural Shift?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 9(3), pages 347-363, April.
  22. Moffitt, Robert, 1990. "The effect of the U.S. welfare system on marital status," Journal of Public Economics, Elsevier, vol. 41(1), pages 101-124, February.
  23. Danziger, Sheldon, et al, 1982. "Work and Welfare as Determinants of Female Poverty and Household Headship," The Quarterly Journal of Economics, MIT Press, vol. 97(3), pages 519-34, August.
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  25. Peter Gottschalk, 1992. "The intergenerational transmission of welfare participation: Facts and possible causes," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 11(2), pages 254-272.
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  28. Christopher Jencks & Susan E. Mayer, . "Do Official Poverty Rates Provide Useful Information about Trends in Children's Economic Welfare?," IPR working papers 96-1, Institute for Policy Resarch at Northwestern University.
  29. Rebecca M. Blank & Patricia Ruggles, 1993. "When Do Women Use AFDC & Food Stamps? The Dynamics of Eligibility vs. Participation," NBER Working Papers 4429, National Bureau of Economic Research, Inc.
  30. Kathleen McGarry, 1996. "Factors Determining Participation of the Elderly in Supplemental Security Income," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 331-358.
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  33. Jennifer L. Warlick, 1982. "Participation of the Aged in SSI," Journal of Human Resources, University of Wisconsin Press, vol. 17(2), pages 236-260.
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Citations

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Cited by:
  1. 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).
  2. Peter R. Mueser & Kenneth R. Troske & David R. Stevens, 2007. "The Impact of Welfare Reform on Leaver Characteristics, Employment and Recidivism: An Analysis of Maryland and Missouri," Working Papers 0720, Department of Economics, University of Missouri.
  3. Robert A. Moffitt & David W. Stevens, 2001. "Changing caseloads: macro influences and micro composition," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 37-51.
  4. 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 2004231f, Statistics Canada, Direction des etudes analytiques.
  5. 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 2005245e, Statistics Canada, Analytical Studies Branch.

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