Some Evidence on Race, Welfare Reform, and Household Income

Published in: American Economic Review, v. 93, no. 2, May 2003, p. 293-298

Posted on RAND.org on January 01, 2003

by Marianne P. Bitler, Jonah Gelbach, Hilary Hoynes

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In this paper the authors discuss the identification of Temporary Assistance for Needy Families (TANF) effects in a prototypical nonexperimental model and show that if TANF effects are the same in every year, then the lack of time variation in TANF implementation is not problematic. If TANF and trend effects are allowed to vary over time in an unrestricted fashion, then TANF effects for later years are unidentified. The authors also propose a method for bounding impacts in light of this identification problem, and apply this method to analyze the impact of TANF on household income for a sample of children in the Current Population Survey (CPS) covering calendar years 1988-1999. The authors also document significant heterogeneity in the association between household income and both TANF and residual factors across white, Hispanic, and black children. The authors results suggest that for 1997, TANF is associated with (insignificant) increases in household income for whites and Hispanic children and (again insignificant) reductions in household income for black children. The point estimates for 1998 and 1999 bounds suggest that the impact may have been positive for all three groups. $

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