Time Limits: The Effects on Welfare Use and Other Consumption-Smoothing Mechanisms. Francesca Mazzolari, University of California - Irvine, and Giuseppe Ragusa, University of California – Irvine.

Description

Welfare time limits—arguably one of the most radical changes of all U.S. welfare reform developments in the 1990s—reduce caseloads directly by cutting off benefits after a time-limited usage, and may also provide families with an incentive to reduce welfare use in order to conserve their benefits. Both effects depend on the stock of remaining months of eligibility. The Survey of Income and Program Participation (SIPP) provides the most valuable source of data to define this crucial determinant of take-up and eligibility under time limits, and so to evaluate the effects of this programmatic feature. Because of its longitudinal design and collection of information on monthly welfare use, remaining months of eligibility can be partly recovered from a family’s transitions into and out welfare during the sample period. However, since the SIPP consists of several separate panels, in-sample information must be complemented with information from the retrospective questions on past welfare use asked at the beginning of each panel.

This project proposes to use the 2004 SIPP panel (together with former panels) and extend existing work on the effects of time limits in two important ways. First, we will provide updated figures on the fraction of families that have hit the limit, and on the probability of welfare use among them—to assess the degree to which time limits have been enforced. Second, we will evaluate the effects of time limits not only on welfare use, but also on a wide variety of other income sources potentially available to families banking or losing TANF eligibility. The analysis will help assessing (i) whether time limits (together with other welfare reform features) promoted families’ transition from welfare to work (and which kind of work), or instead made them dependent on other kinds of transfers (e.g., from friends or other government programs); (ii) the foregone consumption smoothing benefits attributable to reduced welfare generosity.

Besides the policy significance of the issues being studied, this project will also explore the use of imputation techniques to recover potentially missing information on remaining months of eligibility for individuals as of the time they first enter in the SIPP sample—a problem that is likely to be more common in the 2004 panel than it was in the 2001 panel.