The Effects of A Workfare Policy and Time: Are the Effects of the US Welfare Reform Sustainable?

Abstract

The purpose of this study is to examine the relationship between the effects of welfare reform and time, using the administrative data from Wisconsin. Welfare reform in the US has been known as a success in terms of caseload reduction and relatively high short-term employment rates of TANF leavers. However, these short-term success may be due to the strong economy in the late 1990s. Thus, the “pure”effects can be examined by separating the welfare reform and the strong economy. This study examines the long-term employment rates of TANF leavers, controlling for local labor market conditions and compares the employment outcomes before exiting welfare with those after exit. The results show that the relationship between time after exit and the employment status of TANF leaver is negative and statistically significant. In addition, compared to pre-exit employment rates, the positive employment effects of welfare reform have been sustained only for three years after exit.