NCPA - National Center for Policy Analysis

Time Limits Lower Welfare Use

July 10, 2003

Time limits on welfare programs significantly reduce welfare use among families with young children.

Under the Temporary Assistance to Needy Families (TANF) program, a family can only receive federal benefits for five years or less, and only if there is a child in it under 18 years of age. Families with the youngest children have the longest eligibility horizons and thus the greatest incentives to reduce their current welfare use to preserve their future eligibility.

Using data from Florida's Family Transition Program, researchers calculated that:

  • For a family with a 36-month time limit whose youngest child was five years old, the limit reduced welfare use by seven percentage points.
  • By contrast, the limit reduced welfare use only 1.4 percentage points for a family whose youngest child was 13 years old.
  • Time limits alone would have reduced welfare receipt by an estimated 16 percent, say researchers, but other measures in the Florida program encouraged welfare use, so the actual net reductions achieved were smaller.

Reductions in welfare use resulting from time limits are more likely to occur earlier, rather than later, in childhood; recent studies also suggest that the younger a child is when his family experiences poverty, the more likely he will suffer negative effects in terms of academic achievement.

More research is needed to determine whether or not age-related reductions in welfare payments result in lower incomes for families on the welfare rolls; if that is the case, time limits may affect young children more adversely than programs without expiration dates.

Source: Jeffrey Grogger and Charles Michalopoulos, "Welfare Dynamics Under Time Limits," Journal of Political Economy, June 2003.

 

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