Initial Welfare Spells: Trends, Events, and Duration, with Implications for Welfare Reform

A mother's initiation of welfare receipt is a key event for understanding the dynamics of welfare receipt and the likely consequences of welfare reform legislation passed in 1996. Using 28 years of data from the Panel Study of Income Dynamics (PSID), we conduct a number of related analyses of first welfare spells. We first examine trends in the number and duration of first welfare spells. As with the size of the more general AFDC caseload, we find in the late 1980s increases in both the number of initial spells and in the duration of those spells. Second, we examine trends in events and demographic characteristics associated with the initiation of first welfare spells. Not surprisingly, we find that young age, out-of-wedlock first births and, in particular, never-married marital status are predictive of longer welfare receipt. However, trends in neither the frequency of these conditions and events nor in the welfare durations associated with them account for the increasing caseloads of the late 1980s. Third, we use recent PSID data containing monthly patterns of welfare receipt beginning in 1983 to explore the likely effects of a two-year limit on the combination of welfare without employment and a five-year limit on total receipt. W e find that about 13% of first-time receipients will reach 60-month time limits with a single continuous spell, and an additional 15-20% will reach the 60-month limit within ten total years. In the case of 24 months of receipt and no work, the comparable figures (about 20% right away and 40% within eight years) are higher but in the same proportion. We explore the issue of interstate mobility and find that 13.6% of receipients with five or more years of receipt move between states at least once between initial receipt and meeting their five-year limits.