Not since its introduction in the New Deal has the nation’s social safety net been as radically transformed as it was in 1996 with the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). That legislation eliminated the entitlement to cash assistance for poor mothers with children, in place since the 1930s, and in its stead imposed work mandates and time limits on recipients.

The changes did not occur without sometimes fierce—debate, and the effects of reform have been carefully monitored by both sides, generating numerous largescale, rigorous studies, as Jeffrey Grogger and Lynn Karoly detail in their seminal volume Welfare Reform: Effects of a Decade of Change (Harvard University Press, 2005). With welfare caseloads cut by more than half and family income remaining steady, even its critics must agree, Grogger says, “that welfare reform was at the least a measured success.”

Grogger and Karoly assembled the results from nearly five dozen studies on welfare reform, studies that were able to tease out the effects of welfare reform policies by looking at (among other things) the economy and the expanded Earned Income Tax Credit, another program for low-income workers. They also examined whether the outcomes matched what was predicted from economic models, such as the effects on women’s behavior of work mandates (in exchange for cash assistance), financial incentives (working women can now keep a larger portion of their welfare checks than in the previous system), and time limits (five-year lifetime limit), among others.

“It wasn’t at all obvious that the results should fit the model,” Grogger said, “but that’s pretty much what happened.”

In the debates leading up to reform, for example, there was much concern that workmandates would unduly burden single mothers, requiring them to balance childrearing with work. Economic models, however, predicted that women facing a work mandate or lost welfare would go to work, because the burden of juggling work and family alone would be less costly than losing a welfare check. And that seems to be what has happened.

Perhaps the most controversial new policy was to impose a five-year lifetime limit on welfare receipt. This had opponents, most famously the late Senator Moynihan (D-NY), who argued that families would be sleeping on grates. Although less extensively studied, indications are that, as predicted, women are essentially calculating that using up time on welfare today, instead of banking it for the future, is too costly. This is especially true for families with young children, given that they have the longest horizon for potential welfare use (families become ineligible for welfare once their youngest child turns 18).

“We’ve had repeated episodes of discontent over welfare in the past. It’s a perennial flashpoint in American politics,” Grogger says. “We’re going to want to fix the system again at some point, and now we know a whole lot more about what happens, so we’ll have a firmer basis for policy reform in the future.”

A more important policy question that has been largely ignored, Grogger says, is how the policies have shaped potential welfare recipients’ thinking. “We—both analysts and policymakers—have this mind-set of people leaving welfare. What we’re missing is those coming on welfare. We don’t know nearly enough about how they make decisions to go on welfare in the first place.”

Grogger and colleagues, for example, have found that reductions in welfare entries can explain nearly half of the caseload decline since 1996, yet few researchers have examined this “entry” question.

In the end, as Grogger and Karoly’s book proves, politics does not necessarily have to be divorced from economic analysis. “We hope there’s a value in compiling this base of data so people in the future don’t have to go thumbing through filing cabinets of primary studies to figure out what might happen if they change a policy. Now we can better gauge how you might want to remedy problems in the future and spare yourself the prospect of costly unintended consequences.”

Barbara Ray

On a related note...
Jeffrey Grogger will also be one of the speakers at the Center for Human Potential and Public Policy's 2006 conference, “Developmental, Economic and Policy Perspectives on Welfare Reform and Child and Family Well-being: A Decade after the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA).” For more information, visit harrisschool.uchicago.edu/Centers/chppp/2006conference.asp/.