Over the past 30 years, welfare and other public policies for families living in poverty have developed a primary objective of increasing parents’ self-sufficiency by requiring and supporting employment. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), passed in 1996, was a milestone in this effort, limiting the length of time that families can receive federal cash welfare assistance and requiring most of them to participate in employment-related activities to be eligible for such assistance. In addition, during the 1990s the maximum benefits available to working-poor families through the Earned Income Credit (the federal tax credit that supplements the earnings of low-income families), publicly funded health insurance, and child care assistance were expanded to reward work outside the welfare system. Because many of these benefit expansions encourage parental employment, and because other changes have weakened the safety net for families in which parents do not maintain employment, all these developments may have important consequences for children.

Proponents of changes in welfare policy have argued that parental employment benefits children by providing them with family role models who work and are self-sufficient and by introducing a regular schedule into the family routine. But employment may also create stress in the family, reduce parents’ opportunities to spend time with their children, and interfere with parents’ monitoring of their children’s activities ― particularly in single-parent families. Children may also be influenced by parental employment through changes in family resources: If family income or subsidies supporting such work-related needs as child care increase, children may benefit; if family resources decrease, children may be harmed. The critical question for policy is not “What are the effects of welfare reform on children?” Instead, it is “What program features are most likely to promote children’s well-being?” or, conversely, “What program features harm children or leave them unaffected?”

In this monograph, we synthesize the results of five large-scale studies (see text box) that together examine the effects on children of 11 different employment-based welfare and antipoverty programs aimed primarily at single-parent families. (A companion document[1] examines the effects of these and other programs on parental employment, welfare use, and income.) Specifically, we attempt to identify the program features that are associated with effects on children’s school achievement, social behavior, and health. Although most of the studies were under way by 1996, they were designed to test the effects of many program features that have been implemented by the states since the federal welfare law of 1996 was passed. The monograph is a product of the Next Generation project, a collaboration among researchers at the Manpower Demonstration Research Corporation (MDRC) and several leading research institutions that is being funded by the David and Lucile Packard Foundation, William T. Grant Foundation, and John D. and Catherine T. MacArthur Foundation.

We classify the programs in these studies on the basis of three features that might have affected the experiences of children in the participating families:

1. Earnings supplements. Four of the programs offered generous earnings supplements designed to make work more financially rewarding by providing families with cash supplements or by increasing the amount of welfare that parents could keep when they went to work. (One of the programs also supplemented earnings less directly by subsidizing child care and healthcare beyond the levels provided in the community.) Earnings supplements are intended to increase family resources as well as to encourage parental employment, and in the programs under study they generally succeeded in achieving both of these goals. While some of the programs with earnings supplements included other components as well, the provision of supplements was the only feature that the four programs in this category shared.
2. Mandatory employment services. Six of the programs provided only mandatory employment services — such as education, training, or immediate job search — in which parents were required to participate to be eligible to receive cash welfare benefits. Parents who failed to comply were subject to sanctions in the form of reduced welfare grants. The six programs in this category included mandatory employment services without any earnings supplements or time limits. In the programs under study, participation mandates (designed primarily to increase employment) were generally successful in raising employment rates. When mandates were implemented without earnings supplements, participants lost welfare benefits as they gained earnings, so these programs did not usually raise family income or resources.
3. Time limits. One of the programs under study put time limits on families’ eligibility for welfare benefits, restricting eligibility to a certain number of months in a specified period. This program was a pilot welfare reform initiative implemented prior to 1996 under waivers of federal welfare rules. Until 1996, cash welfare assistance was a federal entitlement that was available as long as it was needed. The federal welfare law of 1996 sets a lifetime limit of five years on cash assistance receipt, but states may impose shorter limits or extend the time limits by using state funds. States may also exempt 20% of the caseload from the limits for hardship reasons. Once a family reaches the time limit, federally funded cash benefits are terminated, but the family normally remains eligible for food stamps, Medicaid, low-income child care assistance, and (where available) state-supported cash assistance. The program with time limits combined them with mandatory employment services and a small earnings supplement; the result was an increase in parental employment but only a modest increase in family income.

All the studies reviewed used a rigorous random assignment research design. Parents were placed at random in either a program group, which had access to the new services and benefits and was subject to the new rules, or a control group, which received the benefits and was subject to the rules that had previously existed in the locality of the study site or sites. In most cases, members of the control group were eligible for cash assistance through Aid to Families with Dependent Children (AFDC), the cash welfare program in effect prior to 1996. Because parents were assigned to the groups at random, the average characteristics of families in the program and control groups should not have differed systematically at the outset. The random assignment method thus ensures that any differences between the two groups found during the study are due to the new program rather than to differences in the families’ initial characteristics or the general economic and social conditions that they experienced.

In surveys conducted two to four years after parents entered the studies examined here, children’s school achievement, social behavior, and health were measured using parents’ reports and, in some studies, standardized tests or teachers’ reports. To ensure the comparability of results, we focused on a subset of measures that were similar across studies yet represented a wide range of outcomes for children that might be affected by welfare and work policies. Using these measures, we conducted analyses for subsamples composed of single parents ― the great majority of whom were women ― with children who ranged in age from approximately 3 to 9 when their parents entered the study. At the time at which school achievement, behavior, and health were measured, the children’s approximate age range was 5 to 12. The findings for all the measures of children’s well-being and for the full samples can be found in the reports from the individual studies.[2]

The difference between the children in the program group families and those in the control group families on a given outcome is referred to as the program’s impact on that outcome. For each of the programs, we computed impacts and tested whether the impacts were statistically significant (that is, unlikely to have occurred by chance). We also examined the patterns of impacts for the programs that shared each of the three features introduced above. Our main findings follow.

• The programs that included earnings supplements, all of which increased both parental employment and income, had positive effects on elementary school-aged children. All four programs that provided earnings supplements led to higher school achievement. Some of the programs also reduced behavior problems, increased positive social behavior, and/or improved children’s overall health.
• Adding mandatory employment services did not generally reduce the positive effects of earnings supplements on children. The only program that included mandatory employment services in addition to an earnings supplement increased parents’ full-time employment but generally did not affect children’s outcomes beyond having the same positive effects as the program did when it was implemented with earnings supplements alone.
• The programs with mandatory employment services, all of which boosted parental employment without increasing income, had few effects on children, and the effects were mixed in direction. These six programs had relatively few noteworthy effects on children. When impacts were found, the effects were about equally likely to be positive as negative. The pattern of impacts appeared to be more closely associated with particular sites than with program characteristics like participation mandates.
• The program with time limits, which led to an increase in parental employment and a modest increase in income, produced few noteworthy impacts on children, and the impacts found did not suggest a consistent pattern of benefit or harm. Our knowledge base is smallest with regard to the impacts of time limits because only one program had time limits, and this program combined them with mandatory employment services and a small earnings supplement. The program’s few impacts on children were mixed: Health improved, but positive social behavior decreased.

These general conclusions are subject to the caveats below.

• Although the effects of earnings supplements on children are encouraging, the improvements are modest when considered in the context of these children’s high levels of disadvantage. Even the programs with the most benefits to children left many families in poverty and many children at risk of school failure and behavior problems. These programs do not eliminate the need for child-focused interventions and reforms that promote school achievement and reduce behavior problems.
• The positive effects of earnings supplement programs on children were most pronounced for the children of long-term welfare recipients. For families in which the parent had a long history of using welfare, the programs with earnings supplements improved children’s development and increased parental employment and family income.
• The conclusions in this monograph are limited to preschool-aged and elementary school-aged children. Infants and toddlers, as well as adolescents, may be affected differently by the welfare reform approaches examined here. Too few of the studies considered here specifically examined children under 3 for general conclusions to be drawn. For adolescents, however, two of the studies (one examining a program with an earnings supplement and another a program with a time limit) found decreases in school achievement and increases in behavior problems among adolescents.
• Although the program features examined in this monograph are similar to those included in many programs that have been implemented by states since 1996, they do not represent the full range of earnings supplements, participation mandates, and time limits currently in effect. The patterns from which these broad conclusions are drawn were observed in programs in different geographic regions with different population characteristics, justifying some confidence that the findings will generalize across different contexts. Nonetheless, most of the studies were conducted prior to the passage of the 1996 federal welfare legislation, and their impacts could be different in a different macroeconomic or policy context. Moreover, while the policies examined here are representative of some of the state policies currently in effect, policies that provide less generous supplements or impose more stringent mandates or time limits than those examined here may have different effects on children.

The welfare reforms initiated by the states and the legislated changes in the 1990s did not lead to one new welfare policy but to a variety of policies that continue to evolve. As welfare caseloads decline, federal and state policies are generally being expanded to reach all working-poor families, regardless of their welfare status. The findings of this synthesis may guide policy choices that promote the development of children both in families receiving welfare and in other low-income families. Welfare reforms and antipoverty programs can have a positive impact on children’s development if they increase employment and income, but increasing employment alone does not appear sufficient to foster the healthy development of children. Children living in poverty are at risk of low achievement, behavior problems, and health problems, so it is critical that policies affecting their families enhance children’s well-being rather than leaving them at the same level of deprivation and risk that they experienced under the former welfare system. We hope that this analysis will help state and federal policymakers make informed choices that keep the effects on children in focus as they design legislation that affects low-income parents.

Notes:

[1]How Welfare and Work Policies Affect Employment and Income: A Synthesis of Research (MDRC). 2001. Dan Bloom and Charles Michalopoulos.

[2] The Family Transition Program: Final Report on Florida’s Initial Time-Limited Welfare Program (MDRC). 2000. Dan Bloom, James Kemple, Pamela Morris, Susan Scrivener, Nandita Verma, Richard Hendra.

Impacts on Young Children and Their Families Two Years After Enrollment: Findings from the [National Evaluation of Welfare-to-Work Strategies’] Child Outcomes Study U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation and Administration for Children and Families; and U.S. Department of Education, Office of the Under Secretary and Office of Vocational and Adult Education). 2000. Sharon McGroder, Martha Zaslow, Kristin Moore, Suzanne LeMenestrel.

New Hope for People with Low Incomes: Two-Year Results of a Program to Reduce Poverty and Reform Welfare (MDRC). 1999. Johannes Bos, Aletha Huston, Robert Granger, Greg Duncan, Thomas Brock, Vonnie McLoyd.

Reforming Welfare and Rewarding Work: Final Report on the Minnesota Family Investment Program: Volume 2: Effects on Children (MDRC). 2000. Lisa Gennetian, Cynthia Miller.

The Self-Sufficiency Project at 36 Months: Effects on Children of a Program That Increased Parental Employment and Income (Social Research and Demonstration Corporation). 2000. Pamela Morris and Charles Michalopoulos.

David and Lucile Packard Foundation, William T. Grant Foundation, John D. and Catherine T. MacArthur Foundation