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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 greates 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 misspecification, and many key variables are poorly measured or omitted. To download this paper, please visit New Zealand's Treasury site.

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Bibliographic Info

Paper provided by Northwestern University/University of Chicago Joint Center for Poverty Research in its series JCPR Working Papers with number 166.

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Date of creation: 01 Apr 2000
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Handle: RePEc:wop:jopovw:166

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References

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  1. J. P. Ziliak & D. N. Figlio & E. E. Davis & L. S. Connolly, . "Accounting for the Decline in AFDC Caseloads: Welfare Reform or Economic Growth?," Institute for Research on Poverty Discussion Papers 1151-97, University of Wisconsin Institute for Research on Poverty.
  2. 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.
  3. 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.
  4. 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.
  5. Timothy J. Bartik & Randall W. Eberts, 1999. "Examining the Effect of Industry Trends and Structure on Welfare Caseloads," Upjohn Working Papers and Journal Articles 99-54, W.E. Upjohn Institute for Employment Research.
  6. 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.
  7. Jennifer L. Warlick, 1982. "Participation of the Aged in SSI," Journal of Human Resources, University of Wisconsin Press, vol. 17(2), pages 236-260.
  8. Sendhil Mullainathan & Marianne Bertrand & Erzo F.P. Luttmer, 1998. "Network Effects and Welfare Cultures," Working papers 98-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Mayer, Susan E, 1993. "Living Conditions among the Poor in Four Rich Countries," Journal of Population Economics, Springer, vol. 6(3), pages 261-86.
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  13. 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.
  14. Rebecca M. Blank, 2001. "What Causes Public Assistance Caseloads to Grow?," Journal of Human Resources, University of Wisconsin Press, vol. 36(1), pages 85-118.
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  17. 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.
  18. 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.
  19. 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.
  20. 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.
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  22. Bruce D. Meyer & Dan T. Rosenbaum, 2000. "Making Single Mothers Work: Recent Tax and Welfare Policy and its Effects," NBER Working Papers 7491, National Bureau of Economic Research, Inc.
  23. 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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  25. 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.
  26. 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.
  27. Eissa, Nada & Liebman, Jeffrey B, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 605-37, May.
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  30. 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.
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Citations

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Cited by:
  1. 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.
  2. Robert A. Moffitt & David Stevens, 2001. "Changing Caseloads: Macro Influences and Micro Composition," JCPR Working Papers 218, Northwestern University/University of Chicago Joint Center for Poverty Research.
  3. 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).
  4. 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).
  5. Finnie, Ross Irvine, Ian 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.

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