An evaluation of work incentive provisions in welfare reform : California work pays demonstration project

다국어 초록 (Multilingual Abstract)

This dissertation examined the impacts of the welfare reform program, California Work Pays Demonstration Program (CWPDP), implemented in 1992. CWPDP was designed to move welfare recipients into the labor market by reducing the amount of AFDC grants and by revoking the time limit on the $30 and one-third earned income disregard.
The evaluation of the policy impacts on the welfare recipients was conducted in three areas: employment, earnings, and the exit rate from welfare. The research hypothesis that CWPDP had positive impacts on the employment and earnings of female heads on aid was established by the literature review. For the subject of exit rates, an a priori hypothesis was not established because CWPDP was expected to have two countervailing effects on the transition rate.
This study used a subset of a database created by the California Department of Social Services, and University of California Data Archive and Technical Assistance. The subset is composed of 3,936 AFDC-FG cases selected in LA County: 1,311 control cases and 2,625 experimental cases. The control group was kept on the AFDC rules as of September 1992, while the experimental group was subject to AFDC rule changes implemented under CWPDP. Earnings data for 12 quarters were employed (the first quarter of 1993 through the second quarter 1996) for analysis of employment and earnings. Monthly data on aid receipt covering 117 consecutive months from January 1987 through September 1996 were used for analysis of exit rates.
The analyses of the employment and earnings using the random effects probit model and the random effects regression model, respectively, indicated that CWPDP did not effectively encourage female heads to participate in the labor market. It also revealed that CWPDP did not significantly increase the earnings of female heads. The analysis of exit rates, using three event history models, showed that CWPDP kept families on aid longer, but the impact was small.
The findings imply that the disincentive structure of the public assistance program is not the main barrier preventing female heads from getting jobs and leaving the welfare rolls. Rather, participation in the labor market and exit from welfare is mainly determined by their own demographic characteristics and the economic cycle.
Based on the findings, policy implications including a fortified EITC, affordable child care services, a flexible exemption rate of TANF, and guaranteed public jobs are suggested in this study.

목차 (Table of Contents)

• Table of Contents
• Abstract = 1
• Table of Contents = iii
• List of Figures = vi
• List of Tables = vii
• Acknowledgment = viii
• Chapter I. Introduction
• 1.1 Introductory = 1
• 1.2 Welfare Dependency and Pro-work Reform Efforts = 2
• 1.3 Work Status of Welfare Recipients = 5
• 1.4 California Work Pays Demonstration Project = 6
• 1.5 Research Questions and Overview of the Study = 7
• Chapter II. Public Assistance Program for Families with Dependent Children
• 2.1 Evolution of the Program = 9
• 2.2 Caseload = 13
• 2.3 Component and Eligibility = 16
• 2.4 Benefits = 17
• 2.5 Funding of AFDC Benefits Payment and Administrative Costs = 19
• Chapter III. California Work Pays Demonstration Project (CWPDP)
• 3.1 Welfare Reform Programs of California = 20
• 3.2 Major Provisions of the CAPDP and CWPDP = 21
• 3.3 Experimental Design of CWPDP = 26
• - Sample Selection = 26
• - Data Set = 27
• Chapter IV. Literature Review
• 4.1 Employment Status of Welfare Recipient = 30
• 4.2 Strategies to Increase Labor Force Participation = 33
• - Reducing Maximum AFDC Grant = 33
• - Changing Benefit Reduction Rate = 35
• 4.3 Welfare Dynamics = 38
• - Length of Spell = 38
• - Determinants of Length of Spell = 43
• - Exit Type = 45
• Chapter V. Conceptual Framework for Evaluating the Impacts of CWPDP
• 5.1 Major Models of Labor Force Participation = 48
• 5.2 Rational Model: Simple Income-leisure Choice Model = 50
• 5.3 Rational Model: Modified Income-leisure Choice Model = 53
• - Income Curve with Tax System = 53
• - Income Curve with Work Expense = 55
• - Determining Hours of Work and Earnings = 56
• 5.4 The Expected Effects of CWPDP on Labor Force Participation = 58
• 5.5 Determinants of Exiting from Welfare Rolls = 60
• Chapter VI. Research Design of Empirical Study
• 6.1 Research Questions = 65
• 6.2 Sample and Data = 65
• 6.3 Process of Collecting Information from Three Data Sets = 68
• - Labor Force Participation Data and Earnings Data = 68
• - Welfare Spells Data = 70
• 6.4 Variables = 72
• 6.5 Model Specification = 76
• - Random Effects Probit Model for Labor Force Participation Analysis = 76
• - Random Effects Multiple Regression Model for Earnings Analysis = 78
• - Event History Analysis Models = 79
• 6.6 Data Analysis and Technical Note = 82
• Chapter VII. Results of Data Analysis
• 7.1 Characteristics of Sample = 84
• 7.2 Results of Analysis for Labor Force Participation = 86
• 7.3 Results of Analysis for Earnings = 90
• 7.4 Results of Welfare Spell Analysis = 93
• Chapter VIII. Summary and Conclusion
• 8.1 Summary = 98
• 8.2 Limitations of the Study = 101
• 8.3 Policy Implication = 102
• References = 105
• Appendices
• Appendix 1 Two-stage estimation of earnings for the entire sample = 112
• Appendix 2-1 Results of analysis for the earnings level with the ordinary least squares regression model = 115
• Appendix 2-2 Results of analysis for the earnings level with the random effects multiple regression model = 116
• Appendix 3-1 Command file for the analysis of earnings and Labor force participation using LIMDEP program = 117
• Appendix 3-2 Command files for the analysis of the transition rate using TDA program = 121
• Appendix 4-1 Command files building the data set of earnings = 124
• Appendix 4-2 Command files building the data set for the duration analysis = 140