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A Stock-Flow Analysis of the Welfare Caseload: Insights from California Economic Conditions

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Author Info
Jacob A. Klerman
Steven J. Haider

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Abstract

During the 1990s, the welfare caseload peaked and then declined by about half. The decline occurred simultaneously with a robust economic expansion and a series of major welfare reforms. This paper reconsiders the methods used in the previous studies to explain these changes. The authors explicitly model the welfare caseload as the net outcome of past flows onto and off of aid and explore the implications of such a stock-flow perspective for understanding the determinants of the caseload size and its evolution over time. The approach is shown to explain some of the anomalous findings in the literature regarding the effects of economic conditions on the welfare caseload. Then, using administrative data for California, the authors estimate the effect of the changing unemployment rate on the underlying flows and simulate the impact of the caseload stock. They find that approximately 50 percent of the caseload decline in California can be attributed to the declining unemployment rate. These estimates are substantially larger than the 20 to 35 percent estimates that are obtained from more traditional methods.

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Paper provided by RAND Corporation Publications Department in its series Working Papers with number 01-02.

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Length: 48 pages
Date of creation: Jan 2001
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Handle: RePEc:ran:wpaper:01-02

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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. Blank, Rebecca M., 1989. "Analyzing the length of welfare spells," Journal of Public Economics, Elsevier, vol. 39(3), pages 245-273, August. [Downloadable!] (restricted)
  2. Timothy J. Bartik & Randall W. Eberts, 1999. "Examining the Effect of Industry Trends and Structure on Welfare Caseloads," Staff Working Papers 99-54, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
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  3. 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. [Downloadable!] (restricted)
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  1. Corrado Andini, 2005. "Unemployment and Welfare Participation in a Structural VAR: Rethinking the 1990s in the United States (Revised)," HEW 0501005, EconWPA. [Downloadable!]
  2. Fitzgerald, John M. & Ribar, David C., 2003. "Transitions in Welfare Participation and Female Headship," IZA Discussion Papers 895, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Finnie, Ross & Irvine, Ian & Sceviour, Roger, 2005. "Summary Of: Social Assistance Use in Canada: National and Provincial Trends in Incidence, Entry and Exit," Analytical Studies Branch Research Paper Series 2005246e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  4. Jonathan F. Pingle, 2003. "What if welfare had no work requirements? the age of youngest child exemption and the rise in employment of single mothers," Finance and Economics Discussion Series 2003-57, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  5. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes & Madeline Zavodny, 2004. "The Impact of Welfare Reform on Marriage and Divorce," Working Papers 110, RAND Corporation Publications Department. [Downloadable!]
    Other versions:
  6. Ross Finnie & Ian Irvine, 2008. "The Welfare Enigma: Explaining the Dramatic Decline in Canadians' Use of Social Assistance, 1993-2005," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 267, June. [Downloadable!]
  7. Jeffrey Grogger & Steven J. Haider & Jacob Alex Klerman, 2003. "Why Did the Welfare Rolls Fall During the 1990s? The Importance of Entry," Working Papers 03-07, RAND Corporation Publications Department. [Downloadable!]
    Other versions:
  8. Rebecca M. Blank & David T. Ellwood, 2001. "The Clinton Legacy for America's Poor," NBER Working Papers 8437, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Adam Looney, 2005. "The effects of welfare reform and related policies on single mothers' welfare use and employment," Finance and Economics Discussion Series 2005-45, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  10. Corrado Andini, 2004. "Unemployment and Welfare Participation in a Structural VAR: Rethinking the 1990S in the United States," CELPE Discussion Papers 80, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
  11. Finnie, Ross & Irvine, Ian & 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. [Downloadable!]
  12. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  13. Jeffrey Grogger, 2003. "Welfare Transitions in the 1990s: The Economy, Welfare Policy, and the EITC," NBER Working Papers 9472, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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