welfare dynamics under time limits l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Welfare Dynamics under Time Limits PowerPoint Presentation
Download Presentation
Welfare Dynamics under Time Limits

Loading in 2 Seconds...

play fullscreen
1 / 23

Welfare Dynamics under Time Limits - PowerPoint PPT Presentation


  • 96 Views
  • Uploaded on

Welfare Dynamics under Time Limits. Jeffrey Grogger Charles Michalopoulos Evrim Aydin-Saher. PRWORA (1996) AFDC TANF → Time Limits Prediction:

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Welfare Dynamics under Time Limits' - cid


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
welfare dynamics under time limits

Welfare Dynamics under Time Limits

Jeffrey Grogger

Charles Michalopoulos

Evrim Aydin-Saher

slide2
PRWORA

(1996)

AFDC TANF → Time Limits

Prediction:

Incentive to conserve welfare benefits for future use should be stronger, younger the youngest child in the family.

slide3
Welfare acts as insurance used to smooth consumption in lifetime utility maximization.

Longer the horizon, higher the value of retaining eligibility for such insurance.

Eligible for welfare as long as youngest child < 18 years old.

Families with youngest children have longest eligibility horizons

Fang & Keane (2004) : “option value”

Use welfare if benefit exceeds earnings at least by the

option value of preserving a month of eligibility.

florida family transition program ftp
Florida Family Transition Program (FTP)
  • Randomized experiment, (applying or recertifying),
  • Waiver from AFDC program rules,
  • Recruitment : May 1994 – October 1996,
  • Escambia County (Pensacola)
  • Time-limit 24 months

Exception : poor families → 36 months (48% of sample)

  • Follow single-parent families for 24 months after random assignment

Sample families could not exhaust benefits within

the 24-month follow up period.

!

slide6
FTP : Time limits

Financial incentives (FI)

Enhanced employment & training services (ES)

  • MWRA exemption age different for the groups
  • FTP MWRA : recipient /case manager ratio low

enhanced employment & training services

  • All else equal, FI and ES expected to welfare use
estimation
Estimation
  • Difference-in-difference estimates
  • Regression Estimates

I. Step Function specification

II. Linear Interaction specification

Advantages:

1. Controlling for personal characteristics

2. Reducing variance of error term – covariates

3. Alternative functional forms for Age-FTP

interaction

difference in difference methodology
Difference-in-difference Methodology

difference

_ −0.086

DD

  • DD Assumptions:
  • “parallel trends”
  • constant treatment effects
  • additivity

treatment

effect

time

assumptions
Assumptions :
  • No time-limit effects on families over the threshold age

16 for 24-month time-limit

15 for 36-month time-limit

  • Effects of individual reforms are additive : FI + ES + TL
  • Effects of FI and ES are age-invariant.

Evidence:

    • National Evaluation of Welfare-to-Work Services (NEWWS)
    • Vermont Welfare Restructuring Project (WRP)
    • Minnesota Family Investment Program (MFIP)
slide10
Age groups:
  • Group 0 : 6 months - 2 years
  • Group 1 : 3 - 5 years
  • Group 2 : 6 -10 years
  • Group 3 : 11 - 14/15 years
  • Group 4 : 15/16 - 17 years

MWRA exemptions

unable to identify effects on Group 0

difference in difference estimates
FTP1 = 0.001

FTP2 = − 0.031

FTP3 = 0.03

FTP4= 0.086

TL + FI + ES

FI + ES

Difference-in-difference Estimates

FTP4> 0 & significant → FI & ES welfare use, all else equal

FTP Total = 0.003 → full sample effect masks variation in age

group effects

slide13

Age-Invariance Assumption

Time-limit Effects

  • DD1, DD2, DD3<0
  • DD2<DD3 (Child care constraints?)
  • DD2<DD1 control for pre-sample

welfare use → G2 used less

DD1 = FTP1 – FTP4 = - 0.085

DD2 = FTP2 – FTP4 = - 0.117

DD3 = FTP3 – FTP4 = - 0.031

i step function specification
I. Step Function Specification

yit = α+α0A0it+α1A1it+α2A2it+α3A3it+

+τ0A0itEi+τTL1A1itEi+ τTL2A2itEi+τTL3A3itEi+

+ τEi+Xitβ+μi+εit

Ajit = 1 if youngest child in ith family falls in group j at time t

Ei= 1 if family i is in FTP group

Xit : exogenous regressors;

( mother’s age, black/white, 2/3 year time limit, number of children in family, mother’s years of schooling, pre-sample welfare use, quarters of employment pre-assignment etc.)

ii linear interaction specification
II. Linear Interaction Specification

yit = α+α0A0it+α1Ait+ τ0A0itEi+τTL1A′itEi+τEi+Xitβ+μi+εit

[Ait − threshold age] if 3 ≤ Ait < threshold age

0 otherwise

  • Family effects (μ) → group-wise dependence

→ OLS std errors downward biased

  • Binary dependent variable → heteroskedasticity

Huber-White Covariance Matrix Estimator

( Heteroskedasticity-Robust Standard Errors )

A′it =

step function results
Step Function Results
  • G0 6.9 %-pt G0 MWRA → welfare use

G1 7.4 %-pt (TYCS, vocational training)

  • τTL1 <τTL2<τTL3

non-price barriers to child care

preschool families cannot fully

respond to time-limits

All groups receive child care subsidies.

linear interaction results
Linear Interaction Results

+1 year age 0.7 %-pts

“reduction in likelihood of

welfare use”

  • 36-month, 5 year old → 7 %-pts reduction
  • 36-month, 13 year old → 1.4 %-pts reduction
slide19
Main results:
  • Time-limits substantially reduced welfare use among

families with young children.

  • Anticipatory responses to time-limits, with leaving

reducing welfare use well before they could have

exhausted their benefits.

additional estimates
Additional Estimates
  • Prior welfare use

• 12 months use & 24 months use – focus most dependent group

2. Shorter follow-up period - 12 months

  • Robustness

• urban/rural - job market differences

• post-TANF & FTP-TANF – behavioural changes - Oct 1996

• out-of-county mobility – no differential mobility between groups

• FI & age-invariance

• ES & age-invariance

conclusion
Conclusion
  • Families with younger ‘youngest children’ less likely to use welfare than families with older ‘youngest children’.
  • FTP time-limits would have reduced welfare receipt by 16%

(reductions weighted by age distributions).

implication
Implication
  • Poverty at younger age → greater adverse effects on

educational attainment

  • Early poverty – ability, adolescent poverty – achievement

(Guo, 1998)

  • Income poverty – preschool ability, later achievement

(Duncan et al. 1998)

  • If welfare reductions

income reductions

policies with

age-neutral effects

further studies
Further studies
  • Grogger (2003) : March CPS (1978−99)

relative to threshold families, ‘3 years old’ families

welfare use 6.6 %-pts, employment 3.4 %-pts

  • Grogger (2004) : March CPS (1978−99)

time-limits reduce welfare use by 6−7 %

  • Fang and Keane (2004) : March CPS (1980−2002)

welfare participation rate 23%-pts

time-limits 11% of this decrease.