degrees of stigma associated with welfare receipt. This stigma can be either transmitted across families in a given neighborhood or city or transmitted across generations, as children of welfare recipients themselves learn to find welfare receipt more acceptable.
This study documents and explores racial and ethnic differences in welfare-participation rates in the United States in two ways. First, we examine what those differences are today and how they have changed over the last decade. We find that substantial racial and ethnic differences in welfare participation exist, regardless of how they are measured, but we also find that these differences have not changed much over this period. Second, we explore the alternative sources for this difference by quantifying the relative importance of measurable risk factors, which differ across race and ethnic groups, on the one hand, and immeasurable differences, which include differences in cultural and social norms, on the other. We find that the majority of most differences in welfare receipt can be explained by measurable risk factors, including differences across race and ethnic groups in earnings and other forms of nonwelfare income, in family structure, in education, and in other variables representing disadvantaged status more generally. This implies that it is these underlying risk factors, and their underlying causes, that require policy attention if racial and ethnic disparities in welfare receipt are to be reduced.
The U.S. welfare system is composed of several distinct components. The most well known is the program that provides cash assistance to families with dependent children—defined as families in which one or both parents are not present—currently called the Temporary Assistance to Needy Families (TANF) program and called Aid to Families with Dependent Children (AFDC) prior to 1996. The AFDC program was created by the Social Security Act in 1935. It originally provided benefits primarily to poor widows, but in the 1960s its caseload shifted toward benefit provision to poor divorced and separated women with children, and has more recently shifted toward poor never-married women who have had out-of-wedlock births.1 These shifts in the composition of the caseload undoubtedly explain some of the changes in public attitudes toward the program. Eligibility for the program also requires low income and low levels of assets. Currently, the TANF program has strict work requirements and a maximum five-year time limit as well.