Explaining Welfare Reform: Public Choice and the Labor Market
This paper seeks to identify factors that could plausibly have led to the contractionary welfare reform initiatives begun at the state and federal levels in the United States in the 1990s, initiatives concentrated on the Aid to Families with Dependent Children (AFDC) program. A review of aggregate time-series evidence, cross-sectional regression research, and studies of attitudes toward welfare spending and toward welfare recipients suggests a role for three types of factors. First, a major expansion of the U.S. welfare system in the late 1980s in terms of expenditures and caseloads may have led voters to want to retrench by cutting back on the AFDC program, even though that program was not primarily responsible for the expansion. Second, declines in the relative and absolute levels of household income, wages, and employment rates among the disadvantaged population may have driven up caseloads and costs, increased the social distance of voters from the poor, heightened concern with work incentives, and led, more generally, to a decrease in the perceived “deservingness” of the poor. Third, a surge of births to unmarried mothers in the 1980s is suggested, by cross-sectional and attitudinal evidence, to have led to a reduction in voter support for the AFDC program.
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