Projects

Insights into the Dynamic Determinants of the Welfare Caseload

Project Investigator/Key Staff: Steven Haider (PI), Jacob Klerman (Co-PI)

Sponsor: U.S. Department of Health & Human Services (DHHS), Office of the Assistant Secretary for Planning and Evaluation (ASPE)

Time Period: September 20, 1999 - September 19, 2000

During the 1990s, the welfare caseload peaked and then declined by about half. The decline occurred simultaneously with a robust economic expansion and a series of major welfare reforms. This paper reconsiders the methods used in the previous studies to explain these changes. We explicitly model the welfare caseload as the net outcome of past flows onto and off of aid and explore the implications of such a stock-flow perspective for understanding the determinants of the caseload size and its evolution over time. The approach is shown to explain some of the anomalous findings in the literature regarding the effects of economic conditions on the welfare caseload. Then, using administrative data for California, we estimate the effect of the changing unemployment rate on the underlying flows and simulate the impact on the caseload stock. We find that approximately 50 percent of the caseload decline in California can be attributed to the declining unemployment rate. These estimates are substantially larger than the 20 to 35 percent estimates that are obtained from more traditional methods.

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Status: Completed

Related Projects: Project continues as "Entry, Exit, and the Changing Composition of the Welfare Caseload"

Publications: A Stock-Flow Analysis of the Welfare Caseload: Insights from California Economic Conditions, Jacob A. Klerman, Steven J. Haider, DRU-2463, 2001 (available in PDF).

"The Relationship between the Economy and the Welfare Caseload: A Dynamic Approach," Steven Haider, Jacob Klerman, and Elizabeth Roth, June 2001 mimeo.

"Dynamic Properties of the Welfare Caseload," Steven Haider and Jacob Klerman, March 2001 mimeo.