The Impact of Welfare Reforms on Welfare Caseload

This research adopts Bayesian multilevel models using annual state panel data to investigate the change in welfare caseloads spanning the period from 1977 to 2003, with particular attention to the impact of state welfare reforms on caseloads in the post-TANF era. This paper starts with generating TANF policy indices by state and by year on a two-dimensional policy space—namely, that the first dimension captures the eligibility policy and the second dimension summarizes the flexibility policy. These two indices are used as a proxy for state TANF programs in my following data analysis. Three major findings in this paper are as follows: first, while the eligibility policy is negatively associated with caseloads, the flexibility policy is positively associated with caseloads. Second, although both economic and policy factors can explain substantive shares of the caseload decline in the mid 1990s, these two factors cannot explain any share of the caseload decline in the most recent years. Third, the raises of minimum wages and EITC rates by the federal government also help reduce welfare caseloads