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Welfare transitions in the 1990s: The economy, welfare policy, and the EITC

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  • Jeffrey Grogger

    (University of Chicago)

Abstract

The rapid decline in the welfare caseload remains a subject of keen interest to both policymakers and researchers. In this paper, I use data from the Survey of Income and Program Participation spanning the period from 1986 to 1999 to analyze how the economy, welfare reform, the earned income tax credit (EITC), and other factors influence welfare entries and exits, which in turn affect the caseload. I find that the decline in the welfare caseload resulted from both increases in exits and decreases in entries. Entries were most significantly affected by the economy, the decline in the real value of welfare benefits, and the expansion of the EITC. Exits were most significantly affected by the economy and federal welfare reform. Federal reform had its greatest effects on longer-term spells of the type generally experienced by more disadvantaged recipients. Some out-of-sample predictions help explain the otherwise puzzling observation that, despite substantial increases in the unemployment rate since 2000, caseloads have remained roughly constant. © 2004 by the Association for Public Policy Analysis and Management

Suggested Citation

  • Jeffrey Grogger, 2004. "Welfare transitions in the 1990s: The economy, welfare policy, and the EITC," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(4), pages 671-695.
  • Handle: RePEc:wly:jpamgt:v:23:y:2004:i:4:p:671-695
    DOI: 10.1002/pam.20042
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    Cited by:

    1. Emily E. Wiemers, 2014. "The Effect of Unemployment on Household Composition and Doubling Up," Working Papers 2014_05, University of Massachusetts Boston, Economics Department.
    2. Snarr, Hal W. & Burkey, Mark L., 2006. "A Preliminary Investigation of Welfare Migration Induced by Time Limits," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 0(Issue 2), pages 1-16.
    3. Herwig Immervoll & Stephen P. Jenkins & Sebastian Königs, 2015. "Are Recipients of Social Assistance 'Benefit Dependent'?: Concepts, Measurement and Results for Selected Countries," OECD Social, Employment and Migration Working Papers 162, OECD Publishing.
    4. Hal Snarr & Dan Axelsen, 2008. "Are Welfare Eligible Households Forward Looking?," Economics Bulletin, AccessEcon, vol. 9(8), pages 1-9.
    5. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "Welfare Reform and Children's Living Arrangements," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
    6. Kartik B. Athreya & Devin Reilly & Nicole B. Simpson, 2010. "Earned income tax credit recipients: income, marginal tax rates, wealth, and credit constraints," Economic Quarterly, Federal Reserve Bank of Richmond, issue 3Q, pages 229-258.
    7. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "Welfare Reform and Children's Living Arrangements," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
    8. Jeffrey Grogger & Steven J. Haider & Jacob Klerman, 2003. "Why Did the Welfare Rolls Fall During the 1990's? The Importance of Entry," American Economic Review, American Economic Association, vol. 93(2), pages 288-292, May.
    9. Ayala, Luis & Rodriguez, Magdalena, 2007. "Barriers to employment and welfare dynamics: Evidence from Spain," Journal of Policy Modeling, Elsevier, vol. 29(2), pages 237-257.
    10. John C. Ham & Xianghong Li & Lara D. Shore-Sheppard, 2016. "The Employment Dynamics of Disadvantaged Women: Evidence from the SIPP," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 899-944.
    11. Gregory Acs & Katherin Ross Phillips & Sandi Nelson, 2005. "The Road Not Taken? Changes in Welfare Entry During the 1990s," Social Science Quarterly, Southwestern Social Science Association, vol. 86(s1), pages 1060-1079.
    12. Kenworthy, Lane & Marx, Ive, 2017. "In-Work Poverty in the United States," IZA Discussion Papers 10638, Institute for the Study of Labor (IZA).
    13. Boudreaux, Michel & Lipton, Brandy, 2018. "Medicaid Benefit Generosity and Labor Market Outcomes: Evidence from Medicaid Adult Vision Benefits," MPRA Paper 83916, University Library of Munich, Germany.
    14. Emily Wiemers, 2014. "The Effect of Unemployment on Household Composition and Doubling Up," Demography, Springer;Population Association of America (PAA), vol. 51(6), pages 2155-2178, December.
    15. Jeffrey Grogger & Steven J. Haider & Jacob Klerman, 2003. "Why Did the Welfare Rolls Fall During the 1990's? The Importance of Entry," American Economic Review, American Economic Association, vol. 93(2), pages 288-292, May.
    16. repec:ebl:ecbull:v:9:y:2008:i:8:p:1-9 is not listed on IDEAS

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    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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