Welfare Reform, the Business Cycle, and the Decline in AFDC Caseloads
Recent research by the Council of Economic Advisers (1997) and Ziliak, Figlio, Davis, and Connolly (1997) provides substantively different estimates of the impact of the macroeconomy and welfare reform in accounting for the recent decline in AFDC caseloads. In this paper we conduct an extensive reconciliation between the findings in the CEA and Ziliak et al. In addition, we also address the issue of how welfare recipiency might respond in the event of a recession via a dynamic simulation model. Lastly, we examine the possibility of interactions between the macroeconomy and welfare reform. Using the data and sample period employed by the CEA, our reconciliation suggests that the differences in results between the CEA and Ziliak et al. emanate largely from the treatment of dynamics. The primary consequence of controlling for caseload dynamics is to reduce the role of welfare reform relative to the macroeconomy in accounting for the decline in AFDC caseloads. Once we control for dynamics, we attribute up to 75 percent of the 1993 to 1996 caseload decline to the macroeconomy and at most 1 percent to welfare reform. Our dynamic simulations underscore the cyclical sensitivity of welfare recipiency -- a 2 percentage point increase in the unemployment rate leads up to an 11.7 percent increase in welfare recipiency after four years. Finally, the results from interactions between the macroeconomy and welfare reform indicate that pre-TANF welfare reform required a robust economy (i.e. low unemployment rates) in order to have a negative impact on recipiency rates.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||01 Mar 1999|
|Note:||This paper is not available for download|
|Contact details of provider:|| Postal: Harris Graduate School of Public Policy Studies, 1155 E. 60th Street Chicago, IL 60637|
Web page: http://www.jcpr.org/wp/ByDate.html
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:wop:jopovw:77. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.