Exiting welfare in the 1990s: Did public policy influence recipients' behavior?

This paper evaluates the association between welfare policies implemented by states in the early to mid-1990s and the rate at which female household heads with children exit AFDC for work or for non-work reasons. The results show that waiver policies requiring work, such as the work requirement and the elimination of exemptions for mothers of very young children, are associated with more rapid exits through employment. Incentive policies that make work more attractive by allowing mothers to remain eligible as earnings rise extend the period of welfare receipt. Neither time limits, the family cap, nor sanctions were related to welfare exits during this early period of welfare reform. Results suggest that other policies implemented in the 1993-1996 period, such as the EITC, may have also influenced welfare exits. In addition, the economy played an important supportive role in facilitating recipient exits from public assistance. While relatively high unemployment rates did not deter recipients from working, state prosperity increased the positive impact of work requirements on work exits.