has the 1996 welfare reform reduced the u.s. poverty rate an.pdfVIP

Has the 1996 Welfare Reform Reduced the U.S. Poverty Rate? An Empirical Analysis Using Panel Data Hui Li Mukti Upadhyay Eastern Illinois University Eastern Illinois University Abstract This paper empirically analyzes the effects of welfare reform on US poverty by applying a two-stage estimation procedure with the random effects model using panel data from 1991 through 2003. Our results suggest that a rise in TANF or in unemployment rate raises poverty, whereas the welfare reform started in 1996 has not contributed significantly to poverty reduction. Citation: Li, Hui and Mukti Upadhyay, (2008) Has the 1996 Welfare Reform Reduced the U.S. Poverty Rate? An Empirical Analysis Using Panel Data. Economics Bulletin, Vol. 9, No. 2 pp. 1-4 Submitted: November 2, 2007. Accepted: February 15, 2008. URL: /2008/volume9/EB-07I30003A.pdf I. Introduction We examine antipoverty effects of the welfare legislation of 1996. Poverty reduction is a commonly recognized social goal around the world. In the US, the poverty rate has remained above 12 percent for more than a decade (US Census) with the lowest rate of 11.3 percent observed in 2000. 37 million, or about 1 out of 8, Americans live in poverty. With the ebb and flow of the poverty-related concerns at the U.S. policy circles, the last major act of legislation resulted in the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, later known as the welfare reform. The stated goal of the reform was to establish a welfare system that would promote “responsibility, work ethic, self-sufficiency, and family values.” By imposing strict work requirements, PRWORA ended the six decades long Aid to Families with Dependent Children (AFD