Research
BPEA | Fall 2010
Fall 2010
The 1996 welfare reform led to sweeping changes to the central
cash safety net program for families with children. Along with other
changes, the reform imposed lifetime time limits for receipt of cash welfare,
effectively ending its entitlement nature for these families. Despite dire predictions,
previous research has shown that program caseloads declined and
employment increased, with no detectible increase in poverty or worsening of
child well-being. We reevaluate these results in light of the severe 2007–09
recession. In particular, we examine how welfare reform has altered the cyclicality
of the response of caseloads and family well-being. We find that use of
food stamps and noncash safety net program participation have become significantly
more responsive to the economic cycle after welfare reform, rising more
when unemployment increases. By contrast, we find no evidence that cash welfare
for families with children is more responsive, and some evidence that it
might be less so. We find some evidence that poverty increases more with
increases in the unemployment rate after reform, and none that it increases less.
We find no significant effects of reform on the cyclical responsiveness of food
consumption, food insecurity, health insurance, household crowding, or health.
