Welfare reform: the US experience

The reform of the cash-based welfare program for single mothers in the US which occurred in the 1990s was the most important since its inception in 1935. The reforms imposed credible and enforceable work requirements into the program for the first time, as well as establishing time limits on lifetime receipt. Research on the effects of the reform have shown it to have reduced the program caseload and governmental expenditures on the program. In addition, the reform has had generally positive average effects on employment, earnings, and income, and generally negative effects on poverty rates, although the gains are not evenly distributed across groups. A fraction of the affected group appears to have been made worse off by the reform.

Introduction: The TANF program is only a small component in the larger system of means-tested transfer programs in the US today. Table 1 shows the expenditures and caseloads for the nine largest such programs in 2004. The largest by far is the Medicaid program, which provides health care to low-income families (it is separate from the Medicare program, the social insurance program that provides medical care to the elderly regardless of income level). The Medicaid program provides medical care not only to poor families, including those single mothers who are on TANF, but also to the poor elderly and the disabled, who account for a much larger fraction of program expenditures than single mothers.

Author: Robert Moffitt

Source: Institute for Labour Market Policy Evaluation

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