State TANF Time Limit and Work Sanction Stringencies and Long-Term Trajectories of Welfare Use, Labor Supply, and Income

Abstract

While the 1996 welfare reform increased employment and reduced the participation of the Temporary Assistance for Needy Families (TANF) program immediately after its inception, little is known about the extent to which the reform and stringencies of time limit and work sanction policy features have impacted individuals in the long term. This study used the Survey of Income and Program Participation 1996, 2001, and 2004 panels (1996–2007) and a difference-in-difference-in-difference design to follow low-skilled single mothers’ trajectories of welfare use, labor supply, and income for 10 years after the welfare reform and compare how these trajectories differ by stringencies of state work sanction and time limit policies. The findings indicate that welfare reform had sustained impacts on reducing welfare use (TANF and the Supplemental Nutrition Assistance Program [SNAP] program) and increasing employment. Stringent work sanction and time limit policies were associated with lower TANF participation rates in the long term, but only short time limit policies were associated with reduced SNAP participation. Neither stringent policy feature increased employment nor income. The differential effects by race were also examined and discussed.