The Effect of Specific Welfare Policies on Poverty

Signe-Mary McKernan, Urban Institute
Caroline Ratcliffe, Urban Institute

This paper uses monthly individual-level SIPP data and state-level policy data from 1988 through 2002 to measure the effect of specific welfare and related policies on the deep poverty and poverty status of ever-single mothers and children of ever-single mothers. The 19 specific policies included in the model are based on a conceptual framework that lays out a typology of policies hypothesized to affect poverty. We find evidence of both short-run effects of policies and medium-run behavioral effects of policies. More lenient eligibility requirements for welfare receipt generally reduce poverty, as hypothesized. More generous financial incentives to work generally reduce poverty, as hypothesized. Welfare time limits are hypothesized to have ambiguous effects on poverty, and we find few statistically significant effects of our six time limit policies, either jointly or individually.