Did Welfare Reform Change the Determinants of Program Participation and Benefit Levels

ABSTRACT: This paper examines the program participation decision and the determinants of benefit levels for the two major poverty programs, cash transfers and food stamps, before and after the 1996 welfare reforms. While the 1996 reforms ended cash entitlements, the changes to the food stamp program were modest. The data for our study come from the March CPS for 1994 and 1999. We find there is less variation across states in food stamp participation rates and benefit levels than in cash transfers. Southerners are more likely to participate in food stamps yet are less likely to participate in cash transfers. Female heads, the less educated, lower income households, the young, and U.S. citizens are more likely to participate in both programs. Welfare reform has resulted in blacks being no more likely to participate in cash transfers than any other racial group. In addition, welfare reform has eliminated any advantage female heads received in cash benefits. In spite of the reformers efforts to redirect benefits to the most needy, we find that there is no relationship between income and the size of cash transfers. 0