The Welfare Caseload, Economics Growth and Welfare-to-Work Policies: An Analysis of Five Urban Areas

Abstract

This paper uses quarterly data on AFDC (later TANF) recipients in five major urban areas to examine the relative importance of policy reform and economic conditions in explaining the dynamics of the welfare caseload and the employment experiences of welfare leavers. We find that changes in both welfare exits and entries played an important role in the caseload declines of the 1990s. Policy changes were primary in causing changes in these flows, with economic conditions of secondary importance. Although welfare reforms were accompanied by substantial increases in the employment of those leaving welfare, this appears to be largely the result of an increasingly tight labor market rather than the reforms.