The Effect of Welfare Benefit Levels on Poverty among Single-Parent Families

Abstract

This study addresses the question of whether higher welfare guarantees (maximum benefit levels) perpetuate the poverty of poor families, or whether they enable poor families to climb out of poverty. To this end, I use event history analysis to examine whether the size of the AFDC guarantee (a policy variable) affects how quickly single-parent families escape poverty. I also explore whether the effect of the AFDC guarantee varies by the route out of poverty or by family characteristics. The results indicate that higher welfare guarantees hasten exits from poverty when welfare benefits are counted as part of family income. When welfare benefits are not counted as part of family income, higher guarantees have no effect on poverty exits for families headed by women who became single parents at age 20 or older, but they delay earnings-related poverty exits for teenage mothers.

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