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Economic Policy: Simulating Effects of Welfare Reform on Dependency, Work, and Poverty

IJED, Vol. 2 No. 2, (2000)

We use a version of the Simulation of Trends in Employment, Welfare, and Related Dynamics (STEWARD) model to generate provisional estimates of possible responses to Temporary Assistance to Need Family (TANF) plans for single mothers over a four-year period. Varying assumptions about the anticipation of TANF time limits, we find that there is considerable variability in the simulated level of TANF caseloads, but that the employment-related characteristics of the caseload are more stable. We find that, regardless of whether the TANF plan is aggressive or moderate in its incentives and requirements, the percentage of single mothers on TANF in private jobs for at least 30 hours per week is consistently below 10 percent. We also find that levels of extreme poverty among single parents are higher under the aggressive plan than the moderate plan, and under the assumption of forward-looking behavior than the assumption of myopia.

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