Time Limits to Social Assistance in US – Decreased welfare participation by 22 percent and transfer income by 6 percent

BRIEF HIGHLIGHTS

• Several states imposed time limits for welfare receipt in the wake of the Great Recession.
• Stricter time limits decreased welfare participation by 22 percent and transfer income by 6 percent.
• The time limits tend to decrease earnings in states without generous benefits at baseline.
• Separation from work and welfare diminishes families’ access to financial resources.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) established the Temporary Assistance for Needy Families (TANF) program within the United States, replacing the previous welfare program of Aid to Families with Dependent Children. Perhaps the most controversial aspect of TANF was that it mandated a lifetime limit of 60 months for federal cash assistance. States, however, reserve the right to set stricter time limits or to continue to fund TANF caseloads beyond 60 months using their own funds. During the 2010s, several states imposed TANF time limits for the frst time or made existing time limits more stringent. Te reforms counted families’ existing months on welfare, so families beyond the time limit could lose eligibility and access immediately. As TANF requires most benefciaries to work (or prepare for work), families losing eligibility may also lose incentives to fnd employment.

Comparing states that changed time limits to those that did not, I fnd that stricter time limits decreased annual TANF participation by 22 percent and annual transfer income by 6 percent among single mothers without college degrees, who make up most of the TANF population. Moreover, stricter TANF time limits did not increase employment or earnings among single mothers in states without generous programs at baseline. My fndings suggest that TANF work requirements can efectively increase work participation and that removing TANF eligibility may reduce this participation. Consequently, decreased TANF generosity diminishes these families’ access to fnancial resources.

Chosen excerpts by Job Market Monitor. Read the whole story @ Effects of Welfare Time Limits