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Time Limits: The Effects on Welfare Use and Other Consumption-Smoothing Mechanisms

  • Mazzolari, Francesca

    ()

    (Centro Studi Confindustria)

  • Ragusa, Giuseppe

    ()

    (LUISS Guido Carli University)

We use data from the Survey of Income and Program Participation covering the period 1989-2006 to investigate the impact that time limits on receipt of Temporary Assistance for Needy Families have on female-headed family outcomes, including welfare use, employment and living arrangements. The effects of time limits depend on the stock of remaining months of eligibility, which in turn depends on the state time limit and on family’s welfare use since the policy was implemented. Since the latter is potentially endogenous to current outcomes, we form a prediction of remaining eligibility based on state rules and observable family characteristics. For families who are predicted to have hit the limit, we find evidence of enforcement of the policy, which causes monthly income from welfare to drop by an average of $250. This loss is not offset by increases in other income sources: not only there is no significant change in earnings (despite a sizable increase in the likelihood that the mother works), but also income from other transfer programs (such as SSI and Food Stamps) decreases – resulting in increasing rates of deep poverty among these families. Additional analyses suggest that doubling up is a way for families who timed out of welfare to share housekeeping expenses.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6993.

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Length: 50 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6993
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  1. Bruce D. Meyer & James X. Sullivan, 2008. "Changes in the Consumption, Income, and Well-Being of Single Mother Headed Families," American Economic Review, American Economic Association, vol. 98(5), pages 2221-41, December.
  2. Lesley J. Turner & Sheldon Danziger & Kristin S. Seefeldt, 2006. "Failing the Transition from Welfare to Work: Women Chronically Disconnected from Employment and Cash Welfare," Social Science Quarterly, Southwestern Social Science Association, vol. 87(2), pages 227-249.
  3. Bitler, Marianne P. & Gelbach, Jonah B. & Hoynes, Hilary W., 2005. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," IZA Discussion Papers 1728, Institute for the Study of Labor (IZA).
  4. Francesca Mazzolari, 2007. "Welfare Use when Approaching the Time Limit," Journal of Human Resources, University of Wisconsin Press, vol. 42(3).
  5. David Card & Andrew K.G. Hildreth & Lara D. Shore-Sheppard, 2004. "The Measurement of Medicaid Coverage in the SIPP: Evidence From a Comparison of Matched Records," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 410-420, October.
  6. Currie, J. & Cole, N., 1992. "Welfare and Child Health: the Link Between AFDC Participation and Birth Weight," Working papers 92-9, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Lucie Schmidt & Purvi Sevak, 2000. "AFDC, SSI, and Welfare Reform Aggressiveness: Caseload Reductions vs. Caseload Shifting," Department of Economics Working Papers 2002-03, Department of Economics, Williams College.
  8. Jeff Grogger & Charles Michalopoulos, 1999. "Welfare Dynamics Under Time Limits," NBER Working Papers 7353, National Bureau of Economic Research, Inc.
  9. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc.
  10. Jeff Grogger, 2000. "Time Limits and Welfare Use," NBER Working Papers 7709, National Bureau of Economic Research, Inc.
  11. Christopher A. Swann, 2004. "Welfare Reform when Recipients are Forward-Looking," Department of Economics Working Papers 04-04, Stony Brook University, Department of Economics.
  12. LaDonna Pavetti & Debra Strong with Ruchika Bajaj Jacqueline Kauff, 2006. "When Five Years Is Not Enough Identifying and Addressing the Needs of Families Nearing the TANF Time Limit in Ramsey County Minnesota," Mathematica Policy Research Reports 81d729fab43c472da69b451d9, Mathematica Policy Research.
  13. Rebecca M. Blank & Patricia Ruggles, 1996. "When Do Women Use Aid to Families with Dependent Children and Food Stamps? The Dynamics of Eligibility Versus Participation," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 57-89.
  14. Gruber, Jonathan, 2000. "Cash welfare as a consumption smoothing mechanism for divorced mothers," Journal of Public Economics, Elsevier, vol. 75(2), pages 157-182, February.
  15. Robert A. Moffitt, 2003. "Means-Tested Transfer Programs in the United States," NBER Books, National Bureau of Economic Research, Inc, number moff03-1, June.
  16. James P. Ziliak & David N. Figlio & Elizabeth E. Davis & Laura S. Connolly, 2000. "Accounting for the Decline in AFDC Caseloads: Welfare Reform or the Economy?," Journal of Human Resources, University of Wisconsin Press, vol. 35(3), pages 570-586.
  17. Robert A. Moffitt, 2003. "Introduction to "Means-Tested Transfer Programs in the United States"," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 1-14 National Bureau of Economic Research, Inc.
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