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The effect of welfare sanctions on TANF exits and employment

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  • Wu, Chi-Fang
  • Cancian, Maria
  • Wallace, Geoffrey

Abstract

Using longitudinal administrative data for Wisconsin, this article accounts for the length of time on welfare and the length of sanctioning to better understand the effect of work-related financial sanctions on cash welfare (TANF) participants' program exits and subsequent employment. Temporary Assistance for Needy Families (TANF) remains an important, if less generous, part of the safety net for families with children. Our findings highlight the importance of considering the time on welfare, duration of sanctions, and post-welfare employment and earnings outcomes. The results indicate that being sanctioned increases the likelihood of transition off TANF cash assistance and this effect increases with the duration of the sanction. In addition to measuring the effects of welfare sanctions on individual participants, the article also estimates the effects of agency sanction policies, using measures of the risk of sanctions at the agency level. Agency policy effects were of interest both because they addressed the potential effects of changes in the threat of sanctions—even on those not directly subject to them—and because the agency effects were not subject to the same concerns about unobserved individual heterogeneity between sanctioned and non-sanctioned participants. We found that an increase in an agency's use of sanctions resulted in increased exits to no job, to jobs paying less than cash benefits, and to jobs paying more than available cash benefits. Our results have important implications for understanding the consequences of financial sanctions for public program participants.

Suggested Citation

  • Wu, Chi-Fang & Cancian, Maria & Wallace, Geoffrey, 2014. "The effect of welfare sanctions on TANF exits and employment," Children and Youth Services Review, Elsevier, vol. 36(C), pages 1-14.
    • Handle: RePEc:eee:cysrev:v:36:y:2014:i:c:p:1-14
    DOI: 10.1016/j.childyouth.2013.10.022
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    References listed on IDEAS

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    1. repec:mpr:mprres:2403 is not listed on IDEAS
    2. Wu, Chi-Fang, 2008. "Severity, timing, and duration of welfare sanctions and the economic well-being of TANF families with children," Children and Youth Services Review, Elsevier, vol. 30(1), pages 26-44, January.
    3. Jean Knab & Sara McLanahan & Irv Garfinkel, 2006. "The Effects of Welfare and Child Support Policies on Maternal Health and Wellbeing," Working Papers 931, Princeton University, School of Public and International Affairs, Center for Research on Child Wellbeing..
    4. repec:mpr:mprres:3959 is not listed on IDEAS
    5. 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.
    6. repec:mpr:mprres:5603 is not listed on IDEAS
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    Cited by:

    1. Cancian, Maria & Han, Eunhee & Noyes, Jennifer L., 2014. "From multiple program participation to disconnection: Changing trajectories of TANF and SNAP beneficiaries in Wisconsin," Children and Youth Services Review, Elsevier, vol. 42(C), pages 91-102.
    2. Shabu Abraham Varghese, 2016. "Poverty in the United States: A Review of Relevant Programs," Poverty & Public Policy, John Wiley & Sons, vol. 8(3), pages 228-247, September.
    3. Julia Shu-Huah Wang, 2021. "State TANF Time Limit and Work Sanction Stringencies and Long-Term Trajectories of Welfare Use, Labor Supply, and Income," Journal of Family and Economic Issues, Springer, vol. 42(4), pages 650-696, December.

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