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Welfare, the Family, and Reproductive Behavior: Report of a Meeting (1998)

Chapter: Trends in the Welfare System

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Suggested Citation:"Trends in the Welfare System." Institute of Medicine and National Research Council. 1998. Welfare, the Family, and Reproductive Behavior: Report of a Meeting. Washington, DC: The National Academies Press. doi: 10.17226/6001.
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TRENDS IN THE WELFARE SYSTEM

Spending on income support increased in real terms during the 1990s, but the increase has been very uneven across programs. Rebecca Blank reviewed trends in participation rates and expenditures for a full range of public assistance programs, including both cash and in-kind assistance and tax credits. Real expenditures for AFDC have been level, never attaining in recent years the peak of the mid-1970s. The number of participants in AFDC grew in the first half of the 1990s, as both nonmarital fertility rates and the proportion of unwed mothers participating in AFDC rose, so the benefits per participant fell steadily in real terms to an all-time low of less than $150 dollars per month (in 1995 dollars). However, most of the growth in overall spending on public assistance came, not from AFDC expenditures, but from increases in both the number of participants and per capita spending for Medicaid, food stamps, and Supplemental Security Income (SSI).

At the state level, the contrast among programs is even more striking. All states spent more in 1995 for public assistance than they did in 1985, but in almost all cases non-Medicaid spending declined. The overall increase was entirely due to Medicaid, which accounts for 11 percent of the average state budget; non-Medicaid public assistance accounts for about 3 percent. Most of the Medicaid increase was due to rising medical and long-term care costs for the elderly and the disabled.

Blank argued that, since the 1980s, there has been an ever-increasing emphasis on behavioral requirements for program eligibility, with particular emphasis on work and training. One of the fastest-growing income support programs is the Earned Income Tax Credit, targeted to the working poor, which exemplifies a trend toward linking assistance to desirable behavior. There has also been a return to local and state responsibilities for designing programs, culminating in the 1996 act.

"Overall, we are moving further away from a system that provides direct cash assistance payments to low-income families, toward a system that increasingly conditions its assistance much more closely on particular groups that meet behavioral as well as income requirements."

—Rebecca Blank

Given these trends in public assistance, why is there so much focus on the AFDC program and so little on the "budget busters," Medicaid and SSI? William Dickens suggested several answers: one is the continued increase in labor force participation rates among mothers of young children. The majority of mothers of young children now work outside the home, and public support for cash assis

Suggested Citation:"Trends in the Welfare System." Institute of Medicine and National Research Council. 1998. Welfare, the Family, and Reproductive Behavior: Report of a Meeting. Washington, DC: The National Academies Press. doi: 10.17226/6001.
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The design of welfare programs in an era of reform and devolution to the states must take into account the likely effects of programs on demographic behavior. In the past, most research on welfare has examined labor market issues, although there have also been some important evaluations of the effects of Aid to Families with Dependent Children on out-of-wedlock childbearing. Much less information is available on other issues equally central to the debate, including effects on abortion decisions, marriage and divorce, intrafamily relations, household formation, and living arrangements. This book of papers contains reviews and syntheses of existing evidence bearing on the demographic impacts of welfare and ideas for how to evaluate new state-level reforms.

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