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Welfare reform in the United States. A descriptive policy analysis

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  • Martin, Megan
  • Caminada, Koen

Abstract

Poverty alleviation is an important objective of European countries and of the United States. If these ‘rich’ states offer elaborate systems of income maintenance, why is there still a considerable amount of poverty? And why are anti-poverty outcomes so different in the United States compared to European countries? This paper completes a trilogy of cross-country research papers on anti-poverty policy. Two former papers analyzed the effects of social transfers on both poverty levels and poverty alleviation through tax and social transfer systems. These papers marked the United States as an outlier: high poverty rates, low public social spending but high private social expenditures, a rather strong belief that people are poor because of laziness or lack of will, and remarkable differences across the Federal States caused by state discretion. Therefore, this paper analyzes U.S. welfare in more detail; we focus on part of the major welfare reform in 1996. The 1996 welfare reform emphasizes an American preference for work. Indeed, the welfare reform increased work, although the earnings of most individuals who left welfare were still below the poverty line, even many years after their exit. A drawback of this work-first approach is the termination of cash assistance after 5 years, especially for vulnerable groups with low skills. Recent economic recession can cause severe troubles; one could - for example – argue that recipients who reach time limits without meeting work requirements should be offered a chance to work in community service jobs in return for cash assistance. We found huge variation of welfare eligibility rights across states, depending on ability to pay and preferences to meet a certain level of social standard and other (social) objectives such as child care, work support and employment programs.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20139.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:20139

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Keywords: welfare reform; poverty;

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References

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  1. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 40(4), pages 1105-1166, December.
  2. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 19(3), pages 975-1028, September.
  3. Sheldon Danziger & Colleen M. Heflin & Mary Corcoran & Elizabeth Oltmans, 2002. "Does it Pay to Move from Welfare to Work?," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 254, Northwestern University/University of Chicago Joint Center for Poverty Research.
  4. Notten, Geranda & Neubourg, Chris de, 2007. "Relative or absolute poverty in the US and EU? The battle of the rates," MPRA Paper 5313, University Library of Munich, Germany, revised 15 May 2007.
  5. Caminada, Koen & Goudswaard, Kees, 2009. "Social expenditure and poverty reduction in the EU15 and other OECD countries," MPRA Paper 20138, University Library of Munich, Germany.
  6. Koen Caminada & Kees Goudswaard, 2005. "Are Public and Private Social Expenditures Complementary?," International Advances in Economic Research, Springer, Springer, vol. 11(2), pages 175-189, May.
  7. Caminada, Koen & Goudswaard, Kees & Koster, Ferry, 2010. "Social income transfers and poverty alleviation in OECD countries," MPRA Paper 20733, University Library of Munich, Germany.
  8. Neeraj Kaushal & Robert Kaestner, 2001. "From Welfare to Work: Has Welfare Reform Worked?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 20(4), pages 699-719.
  9. Timothy Smeeding, 2006. "Poor People in Rich Nations: The United States in Comparative Perspective," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 20(1), pages 69-90, Winter.
  10. Neeraj Kaushal & Qin Gao & Jane Waldfogel, 2006. "Welfare Reform and Family Expenditures: How are Single Mothers Adapting to the New Welfare and Work Regime?," NBER Working Papers 12624, National Bureau of Economic Research, Inc.
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Cited by:
  1. Caminada, Koen & Goudswaard, Kees & Koster, Ferry, 2010. "Social Income Transfers and Poverty Alleviation in OECD Countries," MPRA Paper 27345, University Library of Munich, Germany.

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