Welfare reform's impact on caseload decline in the United States: An application of latent trajectory model

Abstract

This paper examines the effect of welfare reform policies on caseload changes during 1992–2005. Using state-level panel data we estimate latent trajectory models to determine if welfare reform has contributed to changes in the trajectories of caseload growth (decline) beyond what would have naturally occurred through the passage of time. Our results show that (a) states vary considerably in both their mean initial level as well as linear trajectories of caseload changes; (b) welfare reform was responsible for the major share of the decline in caseloads; (c) the economy played a minor role in hastening caseload declines; and (d) other income support policies like EITC and minimum wage also had a role to play.