Welfare Reform: Benefits and Incentives in Rural Areas

This report examines potential effects of the proposed Family Assistance Plan (FAP) on different U.S. regions and places of residence. Both welfare benefits and costs would increase substantially in all U.S. regions and places of residence. Benefits under FAP would increase $3.18 billion (26 percent) nationally over those under current programs. Almost twice as many families would be eligible for the basic FAP transfer than are eligible for the current Aid to Families with Dependent Children program. Compared with current programs, FAP benefit increases would be greatest in the Southern Region, especially the rural South. State differences in welfare benefit levels would be reduced under FAP, but there is little evidence that such differences affect the migration decisions of the poor. Work incentives of the poor are most likely to be affected in the Southern Region, where the benefits would increase substantially, and potential for higher earned income is low because of low skills and educational attainment