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Why Welfare Caseloads Fluctuate: A Review of Research on AFDC, SSI, and the Food Stamps Program

  • Susan E. Mayer

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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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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  1. 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.
  2. Danziger, Sheldon, et al, 1982. "Work and Welfare as Determinants of Female Poverty and Household Headship," The Quarterly Journal of Economics, MIT Press, vol. 97(3), pages 519-34, August.
  3. Christopher Jencks & Susan E. Mayer, . "Do Official Poverty Rates Provide Useful Information about Trends in Children's Economic Welfare?," IPR working papers 96-1, Institute for Policy Resarch at Northwestern University.
  4. David N. Figlio & James P. Ziliak, 1999. "Welfare Reform, the Business Cycle, and the Decline in AFDC Caseloads," JCPR Working Papers 77, Northwestern University/University of Chicago Joint Center for Poverty Research.
  5. 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.
  6. 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.
  7. Thomas Fraker & Robert Moffitt, 1988. "The Effect of Food Stamps on Labor Supply: A Bivariate Selection Model," Mathematica Policy Research Reports efa52cc812a34ce2ac0427b91, Mathematica Policy Research.
  8. 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.
  9. Michael Stavrianos & Lucia Nixon, 1998. "The Effect of Welfare Reform on Able-Bodied Food Stamp Recipients," Mathematica Policy Research Reports f806bb2237d04d4bae2bdf6a8, Mathematica Policy Research.
  10. John M. Fitzgerald, 1995. "Local labor markets and local area effects on welfare duration," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(1), pages 43-67.
  11. 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.
  12. Marianne Bertrand & Erzo F.P. Luttmer & Sendhil Mullainathan, 1998. "Network Effects and Welfare Cultures," NBER Working Papers 6832, National Bureau of Economic Research, Inc.
  13. Robert Moffitt, 1987. "Historical Growth in Participation in Aid to Families with Dependent Children: Was There a Structural Shift?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 9(3), pages 347-363, April.
  14. Rebecca M. Blank, 2000. "What Causes Public Assistance Caseloads to Grow?," JCPR Working Papers 18, Northwestern University/University of Chicago Joint Center for Poverty Research.
  15. 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.
  16. 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.
  17. Robert J. LaLonde, 1995. "The Promise of Public Sector-Sponsored Training Programs," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 149-168, Spring.
  18. 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.
  19. Rebecca M. Blank, 1989. "The Effect of Medical Need and Medicaid on AFDC Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 54-87.
  20. Jane Waldfogel & Susan E. Mayer, 1999. "Male-Female Differences in the Low-Wage Labor Market," Working Papers 9904, Harris School of Public Policy Studies, University of Chicago.
  21. 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.
  22. 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.
  23. 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.
  24. 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.
  25. 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.
  26. 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.
  27. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
  28. David T. Ellwood, 1986. "Targeting Would-Be Long-Term Recipients of AFDC," Mathematica Policy Research Reports 35f03eda0fa0455aa0dc255fb, Mathematica Policy Research.
  29. Moffitt, Robert, 1990. "The effect of the U.S. welfare system on marital status," Journal of Public Economics, Elsevier, vol. 41(1), pages 101-124, February.
  30. repec:mpr:mprres:652 is not listed on IDEAS
  31. 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.
  32. Robert Moffitt & Barbara Wolfe, 1990. "The Effect of the Medicaid Program on Welfare Participation and Labor Supply," NBER Working Papers 3286, National Bureau of Economic Research, Inc.
  33. Jennifer L. Warlick, 1982. "Participation of the Aged in SSI," Journal of Human Resources, University of Wisconsin Press, vol. 17(2), pages 236-260.
  34. 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.
  35. O'Neill, June A & Bassi, Laurie J & Wolf, Douglas A, 1987. "The Duration of Welfare Spells," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 241-48, May.
  36. 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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