EFFECTS OF WELFARE REFORM ON ILLICIT DRUG USE OF ADULT WOMEN

Exploiting changes in welfare policy across states and over time and comparing relevant population subgroups within an econometric difference‐in‐differences framework, we estimate the effects of welfare reform on adult women's illicit drug use from 1992 to 2002, the period during which welfare reform unfolded in the United States. The analyses are based on all available and appropriate national data sets, each offering unique strengths and measuring a different drug‐related outcome. We investigate self‐reported illicit drug use (from the National Household Surveys on Drug Abuse and National Surveys on Drug Use and Health), drug‐related prison admissions (from the National Corrections Reporting Program), drug‐related arrests (from Federal Bureau of Investigation Uniform Crime Reports), and drug‐related emergency department episodes (from the Drug Abuse Warning Network). We find robust evidence that welfare reform led to a 10%–21% decline in illicit drug use among women at risk of relying on welfare, as well as associated declines in drug‐related arrests (6%–7%), drug‐related hospital emergency department episodes (7%–11%), and possibly drug‐related prison admissions (11%–19%). The findings indicate that an appropriately designed welfare system with sufficient job opportunities for those who are able to work can result in both increases in employment and decreases in drug use. (JEL I38, K42, J21)     

WELFARE AND CITIZENSHIP: The Effects of Government Assistance on Young Adults' Civic Participation

Recent scholarship and public discourse highlight an apparent waning of civic engagement in the United States. Although the welfare state is generally thought to support democracy by reducing economic inequality, it may paradoxically contribute to political disempowerment of some groups. We examine the effects of state interventions on civic participation among young adults, hypothesizing that involvement with stigmatizing social programs, such as welfare, reduces political engagement, while receipt of nonstigmatizing government assistance does not dampen civic involvement. Using official voting records and survey data from the Youth Development Study (YDS), a longitudinal community sample of young adults, a series of regression models suggests that welfare recipients are less likely to vote than nonrecipients, whereas recipients of non-means-tested government assistance participate similarly to young adults who do not receive government help. These effects hold even when background factors, self-efficacy, and prior voting behavior are controlled. Welfare receipt is not associated, however, with suppressed participation in nonstate arenas such as volunteer work. Intensive interviews with YDS welfare recipients are used to illustrate and develop the analysis.     

FDI AND INCOME INEQUALITY: EVIDENCE FROM A PANEL OF U.S. STATES

This study employs state‐level panel data to explore the relationship between inward foreign direct investment (FDI) and income inequality in the United States. Using panel cointegration techniques that allow for cross‐sectional heterogeneity and cross‐sectional dependence, we find that, in the long run, FDI exerts a significant and robust negative effect on income inequality in the United States. This result for the United States as a whole does not imply that FDI narrows income gaps in each individual state. There is considerable heterogeneity in the long‐run effects of FDI on income inequality across states, with some states (21 out of 48 cases) exhibiting a positive relationship between FDI in income inequality.(JEL F21, D31, C23)     

Effects of Welfare Reform on Education Acquisition of Adult Women

Education beyond traditional ages for schooling is an important source of human capital acquisition among adult women. Welfare reform, which began in the early 1990s and culminated in the passage of the Personal Responsibility and Work Opportunity Reconciliation Act in 1996, promoted work rather than education acquisition for this group. Exploiting variation in welfare reform across states and over time and using relevant comparison groups, we undertake a comprehensive study of the effects of welfare reform on adult women’s education acquisition. We first estimate effects of welfare reform on high school drop-out of teenage girls, both to improve upon past research on this issue and to explore compositional changes that may be relevant for our primary analyses of the effects of welfare reform on education acquisition among adult women. We find that welfare reform significantly reduced the probability that teens from disadvantaged families dropped out of high school, by about 15%. We then estimate the effects of welfare reform on adult women's school enrollment and conduct numerous specification checks, investigate compositional selection and policy endogeneity, explore lagged effects, stratify by TANF work incentives and education policies, consider alternative comparison groups, and explore the mediating role of work. We find robust and convincing evidence that welfare reform significantly decreased the probability of college enrollment among adult women at risk of welfare receipt, by at least 20%. It also appears to have decreased the probability of high school enrollment among this group, on the same order of magnitude. Future research is needed to determine the extent to which this behavioral change translates to future economic outcomes.     

INTERGENERATIONAL EFFECTS OF WELFARE REFORM: ADOLESCENT DELINQUENT AND RISKY BEHAVIORS

This study investigates effects of welfare reform in the United States on the next generation. Most previous studies of effects of welfare reform on adolescents focused on high‐school dropout of girls or fertility; little is known about how welfare reform has affected other teenage behaviors or boys. We use a difference‐in‐difference‐in‐differences framework to identify gender‐specific effects of welfare reform on skipping school, fighting, damaging property, stealing, hurting others, smoking, alcohol, marijuana, and other illicit drugs. Welfare reform led to increases in delinquent behaviors of boys as well as increases in substance use of boys and girls, with substantially larger effects for boys. (JEL K42, I12, I31, I38)     

Enhancing parental power and flexibility in the transition from welfare to work

Recent welfare reforms in the United States shifted the emphasis from income maintenance to preparation for employment. Many families receiving welfare benefits have members with disabilities, which can complicate the process of transition into the workforce. Rehabilitation professionals have a unique set of skills, expertise and experiences which could enhance work transition outcomes for welfare recipients. This purpose of this article is to (a) familiarize rehabilitation professionals with welfare reform changes in the United States, (b) summarize the experiences of families affected by those changes who participated in a recent study, and (c) present a service delivery model to enhance parental power and flexibility based on rehabilitation principles.     

Verarmungsrisiken nach kritischen Lebensereignissen in Deutschland und den USA

We study how the impact of job loss, sickness, retirement, and family dissolution on the risk of relative income poverty differs between Germany and the United States, and whether the impact of these events has changed between 1980 and 2009. Americans are more likely than Germans to enter poverty after any of the four events, yet they also recover more quickly from job loss and family dissolution. Comparisons over time do not indicate a secular rise in the impact of critical life events on poverty risks, but our results show that poverty trajectories are subject to stronger cyclical fluctuations in the United States: Through its emphasis on market mechanisms, the liberal American welfare state raises the importance of (re-)employment opportunities for coping with the consequences of adverse life events. The absence of clear long-term trends leads to a reassessment of common views about welfare state change such as Jacob Hacker??s thesis of a ??Great Risk Shift?? or the notion of an ??Americanization?? of Continental European welfare states. So far, there is also little evidence that the often claimed recalibration of welfare states towards ??new social risks?? has alleviated the adverse economic consequences of family dissolution.     

Parity of participation in liberal welfare states: human rights,neoliberalism, disability and employment

Governments continue to face challenges in implementing effective strategies to increase social and economic participation of people with disabilities. In a recent OECD high-level policy forum on Sickness, Disability and Work, the main policy message was the need for a culture of inclusion; with a dual focus on short-term active policy interventions and long-term structural reform. This paper examines policies in liberal welfare states that encourage people receiving disability benefits to participate in the labor market. Examples from the United States, the United Kingdom and Australia of active labor market programs aimed at moving people with disabilities from workfare are analyzed in the context of international disability rights and neoliberal discourse. The paper explores the extent to which new approaches to activation policies are facilitating parity of participation and factors that impact the effectiveness of these policies.     

Adult Voluntary Associations and Adolescent Socialization*

The effect of participation in extracurricular activities in high school on membership in adult voluntary associations is examined using longitudinal data from a national sample of adolescents who were followed up in 1970 at about age 30. Independent of social origins, ability, and academic performance, participation in extracurricular school activities has a relatively strong direct effect on participation in adult secondary associations, plus positive indirect effects mediated through educational attainment, occupation and income. Membership in adult voluntary associations, in turn, increases voting behavior and decreases political alienation, thus demonstrating the very broad and long term effects of adolescent socialization in ultimately linking the individual to the political order. The results were similar for men and women.     

State TANF Time Limit and Work Sanction Stringencies and Long-Term Trajectories of Welfare Use,Labor Supply,and Income

While the 1996 welfare reform increased employment and reduced the participation of the Temporary Assistance for Needy Families (TANF) program immediately after its inception, little is known about the extent to which the reform and stringencies of time limit and work sanction policy features have impacted individuals in the long term. This study used the Survey of Income and Program Participation 1996, 2001, and 2004 panels (1996–2007) and a difference-in-difference-in-difference design to follow low-skilled single mothers’ trajectories of welfare use, labor supply, and income for 10 years after the welfare reform and compare how these trajectories differ by stringencies of state work sanction and time limit policies. The findings indicate that welfare reform had sustained impacts on reducing welfare use (TANF and the Supplemental Nutrition Assistance Program [SNAP] program) and increasing employment. Stringent work sanction and time limit policies were associated with lower TANF participation rates in the long term, but only short time limit policies were associated with reduced SNAP participation. Neither stringent policy feature increased employment nor income. The differential effects by race were also examined and discussed.

     

The Marital Status of Recent Mexican Immigrants in the United States in 1980 and 19901

Using Public Use Microdata Samples, we analyze the temporal marriage patterns of recent Mexican immigrants in the United States, and relate these patterns to socioeconomic and political events, such as U.S. immigration reform, increasing returns to skill, and rising incentives for unattached Mexicans to migrate during the 1980s. Our findings indicate that recent Mexican immigrants (particularly men) were less likely to be married within five years of migrating in 1990 than their counterparts had been in 1980. An empirical extension further suggests that the relative endogamy odds among Mexican immigrants who migrated to the United States by 1980 increased during the next decade. Such demographic changes may affect policies involving issues such as education, welfare and retirement.     

TANF’s 15th Anniversary and the Great Recession: are Low‐Income Mothers Celebrating Upward Economic Mobility?

This article examines the impact of welfare reform for the upward economic mobility of low‐income families at the fifteenth anniversary of the Temporary Assistance for Needy Families (TANF) program. The reformed policy was based on assumptions about participating families’ morality and encouraged states to move families off welfare through work and marriage without considering whether they were still poor. TANF was also implemented during an economic boom. Today, the US economy is suffering from the effects of the Great Recession, with many fearing a double dip recession. Poverty rates rose during the last 3 years and are currently above 15 percent. For the first time since 1996, the welfare rolls are increasing in many states. Welfare reform’s ‘work first’ approach did not create lasting upward economic mobility for low‐income families. As an alternative, I explore how higher education for welfare mothers will create opportunities for lasting upward mobility, even in times of recession.     

Welfare Reform and Elderly Immigrants' Naturalization: Access to Public Benefits as an Incentive for Naturalization in the United States

Welfare reform in the United States restricted non‐citizens' eligibility for public assistance programs and strengthened economic benefits from naturalization. We examine the impact of these policy changes on elderly immigrants' naturalization, considering their level of need for public benefits. Using individual data from the Current Population Survey as well as state‐level data, we employ a differences‐in‐differences approach to consider variations in time, state policy, and probability of Medicaid participation. Results show that naturalization significantly increased among elderly immigrants who were likely to participate in Medicaid, suggesting that elderly immigrants in need of Medicaid became naturalized to maintain their eligibility for public benefits after welfare reform.     

THE OPTIMAL TAXATION OF ASSET INCOME WHEN GOVERNMENT CONSUMPTION IS ENDOGENOUS: THEORY,ESTIMATION AND WELFARE

This paper derives the Ramsey optimal fiscal policy for taxing asset income in a model where government expenditure is a function of net output or the inputs that produce it. Extending work by Kenneth L. Judd, I demonstrate that the canonical result that the optimal tax on capital income is zero in the medium to long term is a special case of a more general model. Employing a vector error correction model to estimate the relationship between government consumption and net output or the factor inputs that generate it for the United States between 1948Q1 and 2015Q4, I demonstrate that this special case is empirically implausible, and show how a cointegrating vector can be used to determine the optimal tax schedule. I simulate a version of the model using the empirical estimates to measure the welfare implications of changing the tax rate on asset income, and contrast these results with those generated in a version of the model where government consumption is purely exogenous. The shifting pattern of welfare measurements confirms the theoretical results. I calculate that the prevailing effective tax rate on net asset income in the United States between 1970 and 2014 averaged 0.449. Hence abolishing the tax completely does generate welfare improvements, though only by the equivalent of between 1.103% and 1.616% permanent increase in consumption—well under half the implied welfare benefit when the endogeneity of the government consumption is ignored. The maximum welfare improvement from shifting part of the burden of tax from capital to labor is the equivalent of a permanent increase in consumption of between only 1.491% and 1.858%, and is attained when the tax rate on asset income is lowered to between 0.148 and 0.186. Allowing the tax rate to vary over time raises the maximum welfare benefit to 1.865%. All the results are very robust to a wide range of elasticities of labor supply. (JEL E62, H21, H50)     

Welfare‐to‐Work Reform and Intergenerational Support: Grandmothers' Response to the 1996 PRWORA

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA; Pub. L. 104‐193) in the United States aimed at encouraging work among low‐income mothers with children below age 18. In this study, the author used a sample of 2,843 intergenerational family observations from the Health and Retirement Study to estimate the effects of the reform on single grandmothers who are related to those mothers. The results suggest that the reform decreased time transfers but increased money transfers from grandmothers. The results are consistent with an intergenerational family support network where higher child care subsidies motivated the family to shift away from grandmother provided child care and where grandmothers increased money transfers to either help cover the remaining cost of formal care or to partly compensate for the loss in benefits of welfare leavers.     

Die stille Umverteilung

During the last decades income inequality has risen again in western societies. Whereas empirical indicators and statistical data show in detail the changes in income distribution, sociology has no adequate knowledge about the corresponding micro-level motives. The globalization of value chains, technological change, the increasing occupational participation of women, the decline of union participation and tax reform are considered to be the main factors relevant for the increase in income inequality. It is shown that these variables do not sufficiently explain the micro level of organizational allocation structures, which are mainly experienced as budgetary exigencies. Not only business organizations but also public administrations, welfare organizations, schools, universities and health care organizations are governed by budgets in a similar way. It is hypothesized that budgeting functions as a micro-mechanism to transform economic stagnation into income inequality at a societal level. Delegation of responsibility and the creation of consensus are discussed to be central goals of budgeting in enterprises, social administrations, educational and health organizations and the effects of budgeting on the distribution and the allocation of resources are analyzed.     

Political Incorporation Among Immigrants from Ten Areas of Origin: The Persistence of Source Country Effects

Using four years of data from the Current Population Survey, this study examines the effect of country of origin on two types of political incorporation among immigrants ‐ citizenship and voting ‐ in the contemporary United States. Results show that country of origin is a statistically significant predictor of citizenship acquisition for nine of ten immigrant groups and for voter turnout for five of ten groups, net of income, education, length of residence in the United States, and other demographic characteristics. The findings also suggest that country of origin matters as much for how it interacts with other key characteristics, such as education and income, as for the independent influence it exerts on these two political processes. For immigrants from most countries under examination, lower levels of education and income discourage citizenship acquisition. An exception is found among Britons, for whom lower levels of income encourages naturalizing. In the voting process, higher levels of education encourage voter turnout for most immigrant groups. Though country of origin has a greater effect on naturalizing than on voting, it significantly impacts both types of political incorporation. The differing effects of country of origin and other demographic factors on naturalizing and voting, respectively, suggest the two processes are distinct from one another.     

CONSOLIDATING THE EVIDENCE ON INCOME MOBILITY IN THE WESTERN STATES OF GERMANY AND THE UNITED STATES FROM 1984 TO 2006

The cross‐national intragenerational literature has often analyzed income mobility within short time periods over which mobility might reasonably be thought of as invariant. Here, we argue that a great social transformation—German reunification—abruptly and permanently altered mobility. Using standard measures (with panel data for the western states of Germany and the United States) over the period 1984–2006, we find the conventional result that income mobility is greater in Germany. But when we cut the data into 5‐year windows, we find that income mobility declines significantly over the years immediately following reunification in Germany but not in the United States, using both measures. (JEL J1, J6)     

The More Things Change the More They Stay the Same: Mexican Naturalization before and after Welfare Reform1

During the last decade there has been a dramatic increase in the both the number and the rate of Mexican naturalization. Some have interpreted this increase as a response to changes in welfare and immigration policy surrounding the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which limited public assistance to non‐citizens, and the 1996 Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), which may have increased the incentive to naturalize by making it more difficult for legal immigrants to sponsor their relatives for entry to the United States. This article uses Current Population Survey data from 1994/95 and 2000/01 to examine how the social and economic determinants of naturalization may have changed in order to provide insight into which explanation for the increase in naturalizations is most relevant. We find that while the proportion of Mexican immigrants who are naturalized increased during the 1990s, their determinants have remained largely the same with the exception that those with noncitizen spouses have become more likely to be naturalized in the post‐reform period. This suggests that a more cautious interpretation be taken about the relationship between the increase in naturalizations and welfare and sponsorship restrictions, particularly when regarding Mexican immigrants.     

INEQUALITY AND GROWTH IN THE UNITED STATES: WHY PHYSICAL AND HUMAN CAPITAL MATTER

We investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation, using an annual panel of U.S. state‐level data. Our analysis is based upon the “unified” framework offered by Galor and Moav (2004) while the empirics account for cross‐section dependence, parameter heterogeneity, and endogeneity, in nonstationary series. We conclude that changes in inequality do not influence growth, neither in the short run nor in the long run in the United States as a whole in the 1929–2013 period. Our findings are robust to the inclusion of overall income inequality measures. These findings provide support for the theoretical prediction of the unified theory of inequality and growth, according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the United States experiences during our period of investigation. Therefore, future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the United States. (JEL I21, O47, C23)