Changing Caseloads: Macro Influences and Micro Composition

Studies of the types of women who are still on the welfare rolls, subsequent to welfare reform, are less common than studies of the types of women who have left the rolls. The conventional wisdom is that more skilled women have left the rolls and therefore that less skilled women remain on welfare, implying that the welfare caseload should be becoming increasingly disadvantaged. However, the provisions of the 1996 welfare legislation have mixed predictions for whether this should be expected to occur, for while some provisions should lead to more disadvantaged women remaining on the rolls, other provisions, perhaps surprisingly, should lead to less disadvantaged women remaining on. Estimating the effect of welfare reform on this type of caseload composition is complicated by the simultaneous improvement in the economy as well as long term trends in welfare recipient characteristics. An analysis of Current Population Survey (CPS) data, administrative data from the state of Maryland, and a review of other studies leads to the conclusion that, after netting out the effect of the economy, there is no strong evidence that welfare reform per se has been selective in who has left the rolls and who has stayed on with respect to labor market skill: there is no strong evidence that the welfare caseload is becoming less skilled. Moreover, the results suggest that both more skilled and less skilled women can be found both on and off TANF, and therefore that new policies should be aimed to assist women in multiple situations.