Assessing the impact of welfare reform on single mothers

Since the implementation of Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996, the prevalence of welfare participation among single mothers has dropped dramatically, from 25 % in 1996 to 9 % today. At the same time, the fraction of single mothers who work increased from 74 % in 1996 to 79 % today. But these trends actually began as early as 1993-1994. The goal of this paper is to ascertain the contributions of various components of welfare reform, and other contemporaneous economic and policy changes, to the huge decline in welfare participation and increase in work among single mothers from 1993-2002. To this end, we have constructed an extensive data set that characterizes changes in welfare policy, as well as other important determinants of welfare participation and work, at the State level for the 1980-2002 period. Using these data, we develop a model that rather successfully explains both levels and changes in welfare and work participation rates across States, time, and various demographic groups, for the whole 1980-2002 period. Simulations of the model imply that: • The key economic and policy variables that contribute to the overall 23 percentage-point decrease in the welfare participation rate from 1993-2002 are, in the order of relativ