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Does it Pay to Move from Welfare to Work?

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  • Sheldon Danziger
  • Colleen M. Heflin
  • Mary Corcoran
  • Elizabeth Oltmans
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    Abstract

    The 1996 Personal Responsibility and Work Opportunity Reconciliation Act requires welfare recipients to look for work, has made it much more difficult for nonworking recipients to remain on the welfare rolls, and has made it easier for them to continue to receive welfare benefits if they work part-time at low-wage jobs. In addition, the economic boom of the 1990s and changes in federal and state policies that supplement the earnings and subsidize the work expenses of the working poor have raised the net income gain associated with moving from welfare to work. We analyze data from a panel survey of single mothers, all of whom received welfare in February 1997, and find that by 1999, those who had left welfare and were working and those who were combining work and welfare were financially better off, on average, than those who continued to receive cash assistance but did not work. Those who worked had higher household incomes, lower poverty rates, experienced similar levels of material hardship, engaged in fewer activities to make ends meet and had lower expectations of experiencing hardship in the near future than did nonworking welfare recipients.

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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 254.

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    Date of creation: 08 Jan 2002
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    Handle: RePEc:wop:jopovw:254

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    Cited by:
    1. Hirasuna, Donald P. & Stinson, Thomas F., 2004. "Urban And Rural Differences In Utilization Of State Earned Income Tax Credit Programs: Minnesota'S Experience," Working Papers 18912, Oregon State University, Rural Poverty Research Center (RPRC).
    2. Michelle Livermore & Rebecca Powers & Belinda Davis & Younghee Lim, 2011. "Failing to Make Ends Meet: Dubious Financial Success Among Employed Former Welfare to Work Program Participants," Journal of Family and Economic Issues, Springer, vol. 32(1), pages 73-83, March.
    3. Matthew Gray & David Stanton, 2004. "Lessons of United States welfare reforms for Australian social policy," Others 0405002, EconWPA.
    4. Steven J. Haider & Kathleen McGarry, 2005. "Recent Trends in Resource Sharing Among the Poor," NBER Working Papers 11612, National Bureau of Economic Research, Inc.
    5. Lewis, Dan & Konstantopoulos, Spyros & Altenbernd, Lisa, 2005. "The Correlates of Work in a Post-AFDC World: The Results from a Longitudinal State-Level Analysis," IZA Discussion Papers 1626, Institute for the Study of Labor (IZA).
    6. Ayala, Luis & Rodríguez, Magdalena, 2013. "Health-related effects of welfare-to-work policies," Social Science & Medicine, Elsevier, vol. 93(C), pages 103-112.
    7. Luis Ayala & Magdalena Rodríguez, 2010. "Explaining welfare recidivism: what role do unemployment and initial spells have?," Journal of Population Economics, Springer, vol. 23(1), pages 373-392, January.
    8. Roderick Rose & Susan Parish & Joan Yoo, 2009. "Measuring Material Hardship among the US Population of Women with Disabilities Using Latent Class Analysis," Social Indicators Research, Springer, vol. 94(3), pages 391-415, December.
    9. Nancy E. Reichman & Julien O. Teitler & Irwin Garfinkel & Sandra Garcia, 2004. "Variations in Maternal and Child Well-Being among Financially Eligible Mothers by TANF Participation Status," Eastern Economic Journal, Eastern Economic Association, vol. 30(1), pages 101-118, Winter.
    10. Timothy Smeeding, 2006. "Poor People in Rich Nations: The United States in Comparative Perspective," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 69-90, Winter.
    11. Ayala, Luis & Navarro, Carolina, 2007. "The dynamics of housing deprivation," Journal of Housing Economics, Elsevier, vol. 16(1), pages 72-97, March.
    12. Kwon, Hyeok Chang & Meyer, Daniel R., 2011. "How do economic downturns affect welfare leavers? A comparison of two cohorts," Children and Youth Services Review, Elsevier, vol. 33(5), pages 588-597, May.
    13. Berg, Nathan & Murdoch, James, 2008. "Access to grocery stores in Dallas," MPRA Paper 26585, University Library of Munich, Germany.
    14. Robert Moffitt & Katie Winder, 2005. "Does it pay to move from welfare to work? A comment on Danziger, Heflin, Corcoran, Oltmans, and Wang," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(2), pages 399-409.
    15. Martin, Megan & Caminada, Koen, 2009. "Welfare reform in the United States. A descriptive policy analysis," MPRA Paper 20139, University Library of Munich, Germany.
    16. Wu, Chi-Fang, 2011. "Long-term employment and earnings among low-income families with children," Children and Youth Services Review, Elsevier, vol. 33(1), pages 91-101, January.
    17. Geoffrey L. Wallace & Robert Haveman, 2007. "The implications of differences between employer and worker employment|earnings reports for policy evaluation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(4), pages 737-754.

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