Income and Job Market Outcomes After Welfare: 1990-1995

This article examines a number of models to determine the effects of personal and policy characteristics on how AFDC recipients fare economically after they initially leave welfare. The study includes analyses of wage rates, hours of work, personal earnings, overall income levels, transfer income, time spent employed and not employed, and time spent below the poverty line. Hypotheses regarding area economic conditions, human capital, time spent receiving welfare, state unemployment rates, work training, and health conditions of the children of former recipients are examined. The findings indicate that time spent receiving welfare had little effect on post-welfare economic outcomes. Furthermore, former welfare recipients living in states with more generous welfare payments work more, are no more likely to use welfare, and are generally economically better off than those living in less generous states, even after controlling for income levels within the state. These results indicate that generous state welfare programs may not be a disincentive to work. The findings also indicate that women who are the primary earners in their families after they leave welfare do economically worse than those who are not, even for women who are married. Also, former recipients with little education, who live in areas with high unemployment rates, and who have many or more children after AFDC, fare economically worse than others.