The Effects of Employment Incentives and Cash Transfers on Parent and Child Outcomes: Long-Term Evidence from the Welfare Reform Experiments

Awarded Scholars:
Hilary Hoynes, University of California, Berkeley
Jordan Matsudaira, Cornell University
Zhuan Pei, Cornell University
Project Date:
Dec 2017
Award Amount:
$129,677

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, or welfare reform, dramatically altered the structure of the safety net for families with children by emphasizing work requirements and time limits to discourage welfare dependency. Prior to the reform, MDRC evaluated many state-run randomized experiments involving over 60,000 welfare recipients. In these experiments, recipients in the control participated in the ongoing state programs while the experimental group participated in interventions involving different combinations of job training, job search assistance, financial incentives to work, childcare subsidies, time limits, and/or sanctions. Evaluations of these programs after three to five years indicated that some increased female employment rates and family income, and some reduced welfare utilization. Some studies also indicated positive impacts on the academic achievement and behavior of young children. However, significant questions remain about the extent to which the “work-first” welfare system that was tested by the states and adopted by PRWORA raised family incomes enough to reduce poverty over the long-run, or helped end the “cycle of poverty” by improving the outcomes of the children of welfare recipients through other pathways.

Hilary Hoynes, Jordan Matsudaira, Zhuan Pei, and Pauline Leung, in collaboration with Richard Hendra and Virginia Knox at MDRC, will revisit these experiments and estimate their long-run impacts. The team will examine, in particular, the long-term effects of the New Hope for Families and Children project (New Hope), a pogram that was implemented in Milwaukee in 1994 to provid low-income families with wage supplements, child care subsidies, and health care coverage for three years. Their analysis of New Hope will allow them to (1) develop and refine their capacity to link demonstration participants to their children using Census and other administrative data, (2) develop key outcome measures of earnings, teen pregnancy, marriage and neighborhood quality using Internal Revenue Service (IRS) and Social Security Administration (SSA) data, and (3) extend the analysis to outcomes of the New Hope children who are now in their 20s and 30s.

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