Studies of Welfare Populations: Data Collection and Research Issues. Preexit Benefit Receipt and Employment Histories and Postexit Outcomes of Welfare leavers

06/01/2002

The author is grateful to the Wisconsin State Department of Workforce Development and the Institute for Research on Poverty at the University of Wisconsin-Madison for making the data used in this paper available. Ingrid Rothe, Daniel Ross, and Allison Hales-Espeweth of the University of Wisconsin-Madison's Institute for Research on Poverty, and Barbara Wolfe, Director of IRP deserve special thanks for making the data available and assisting with use of the data. Thanks also to Karl Johnson, who provided research assistance from the project. Finally, the author is grateful to Robert Moffitt for valuable comments on the paper as it developed.

The enactment of time limits, work requirements, and sanctions, among other rules of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), caused many observers to wonder how welfare recipients would respond: Would they leave welfare? Would they find jobs? Would they face hardship or would their economic and family situations improve? These questions prompted numerous studies of "welfare leavers," or those who stopped receiving welfare benefits.

Most of these welfare leaver studies were conducted for monitoring purposes--to inform policymakers and program administrators about the needs and experiences of those who had left welfare. However, some were conducted with the goal of assessing the effectiveness of the reforms; that is, they intended to assess whether the reforms caused those who left welfare to be better off or worse off relative to a comparison group. To make this assessment, the studies usually employed a before-and-after research design, comparing outcomes of welfare leavers before they left welfare to outcomes after they left welfare, or a multiple-cohort design, comparing outcomes of a cohort of people who left welfare prior to the enactment of PRWORA to outcomes of a cohort of leavers who left welfare after enactment of PRWORA. Both of these designs have weaknesses in drawing causal conclusions.(1)

Factors outside of welfare, such as the economy, may also change and affect the outcomes of welfare leavers, making it difficult to assess whether outcome changes are due to the reforms or to the other factors using these methods. Another weakness of these methods is that the characteristics of the people leaving welfare at the time of the study, or at the time the cohorts are drawn, may be driving changes in outcomes. For example, if a cohort of leavers is drawn when the caseload is relatively small, the leavers may be comprised primarily of those who have the most barriers to leaving welfare, such as substance abuse, very young children, or little work experience. Their outcomes after leaving may be much different than the outcomes of a cohort of leavers drawn when the caseloads are relatively large, since this cohort may be composed of leavers with fewer barriers to self-sufficiency. This second problem of the composition of the caseload is also a problem even if the leaver studies are only used for monitoring, and not evaluation, purposes. For example, a monitoring study may be conducted to roughly quantify the need for child care services of those who leave welfare. Those who leave welfare in a time when caseloads are just beginning to drop may be able to leave because they had an easy time securing child care, while those who could not easily find childcare may not leave welfare until much later. It would be hazardous to base conclusions about the need for childcare from any single cohort of leavers if one does not know much about that cohort of leavers.

The National Research Council report (1999) suggested that as a crude means of standardizing descriptions of the caseload and the outcomes of leavers across time and across areas, outcomes could be stratified by the past welfare receipt history and past work experience of welfare leavers. Standardizing the composition of the caseload and the groups of the leavers would then make comparisons of outcomes of leavers across time and jurisdictions more credible because leavers with similar work and welfare receipt histories would be compared to each other. The purpose of this paper is to classify characteristics of welfare leavers and stayers and their outcomes by their preexit benefit receipt and employment experiences to illustrate one method the leaver studies might use to standardize their results to make comparisons across time and jurisdictions more credible. No attempts to make causal attributions are made in this study.

The second section of this study describes the data used. The third section examines the past welfare receipt, employment, and earnings histories of the caseload of AFDC recipients in 1995. Section 4 examines whether and how much welfare leavers work and earn after leaving, whether they return to welfare or use other public assistance after leaving, and how self-sufficient they are after they leave. In discussing each of these outcomes, results are presented separately across different types of welfare leavers based on their past welfare receipt and work histories. This section also examines the outcomes of cases classified as "high-barrier" leavers-that is, those who face multiple barriers to gaining self-sufficiency. The outcomes of this group are presented in an attempt to estimate a lower bound on outcomes of leavers. Section 5 examines the importance of past welfare receipt and work history measures in a multivariate setting. Probit models of the probability of leaving welfare and of being employed a year after leaving welfare, controlling for welfare and earnings histories, as well as demographic characteristics of leavers, are estimated. Tobit estimates of post-welfare earnings, controlling for welfare and work histories and demographic characteristics also are given. The coefficients from these models are then used to predict outcomes of different high-barrier groups to assess how cases with multiple barriers to self-sufficiency fare after leaving welfare.

This study was undertaken as part of a set of papers that explore the importance of caseload composition factors for outcomes of welfare leavers. Moffitt (this volume: Chapter 14) uses the National Longitudinal Survey of Youth data from 1979 to 1996 to describe the welfare receipt and employment experiences of young women ages 20-29. Stevens (2000) uses AFDC and Unemployment Insurance administrative records from Maryland and draws multiple cohorts of leavers across time periods. The past AFDC and work histories of these cohorts are described and employment outcomes after leaving welfare are compared across cases with different welfare receipt and work experience histories.

This study also builds on a series of papers on AFDC leavers in Wisconsin that has been conducted by researchers at the Institute for Research on Poverty at the University of Wisconsin-Madison.(2) These reports have examined employment, earnings, and benefit receipt after leaving welfare for a cohort of July 1995 AFDC recipients who left AFDC in the following year.

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