# Presentation: 104340

## Do TANF Policies Move Work Participation Rates? 

**Caroline Danielson**
**Public Policy Institute of California**
**ACF Welfare Research and Evaluation Conference**
**June 4, 2007**

## Work Participation: FY 2007 and Forwards 

**Denominator**
**Literature on the effects of welfare reform on the TANF caseload (only rough approximation of denominator)**
**Finds negative effects of more stringent time limits and sanctions, and positive effects of financial incentives to combine work and welfare**
**Numerator**
**No research; rather, research on employment and earnings among those “at risk” of welfare receipt**
**With the Deficit Reduction Act (2006), changes to work participation are reason to focus research more precisely on the numerator and denominator**

## Outline

**Our Approach**
**Data**
**Results**
**Conclusions**

## Outline

**Our Approach**
**Data**
**Results**
**Conclusions**

## The Work Participation Rate

**How do policies move the pieces: participation and non-participation? **
**What is their overall effect on the rate?**
**Caution: We do not observe shifting between participation and non-participation, and we do not observe motivation (unable vs. unwilling to comply).**** **

| Participants | Non-participants | Rate |
| --- | --- | --- |
|  |  | ? |
|  |  | ? |
|  |  |  |
|  |  |  |

**NOTE: Of non-participants in FY 2005, approximately 60% had no hours and **
**were not exempted. Approximately 20% were exempted, and the same fraction had**
**some, but not enough, hours of participation.**

## Outline

**Our Approach**
**Data**
**Results**
**Conclusions**

## Data: Strengths

**We use the Data Reports states have been submitting in evidence of their work participation rates.**
**Span FY 1998-2005 **
**Include the full range of allowable activities**
**Cover both TANF and SSP cases**
**Approximately 3,000 cases per state for each FY. Sample doubled for states with both TANF and SSP caseloads.**

## Data: Weaknesses

**Cover only the post-reform period (FY 1998-2005)**
**We include a rich set of controls for state background characteristics that may influence work and welfare receipt**
**States implemented varying work participation policies and regulations**
**We include detailed controls to adjust for these differences**

## Data: Aligning the Past with the Future

**Include both the TANF and SSP caseloads**
**MOE-funded cases must be counted in the rate**
**Exclude sanctioned cases where adult removed**
**BUT these contain a work eligible adult**
**Closest substitute: “Grant reduction” sanction **
**Exclude timed-out cases where adult removed**
**BUT these contain a work eligible adult**
**Closest substitute: “All extended” time limit**
**States now act differently**
**Include controls for the year of observation**
**Compare differences between states that do / do not have a particular policy**

## Outline

**Our Approach**
**Data**
**Results**
**Conclusions**

## Overview of States’ Policies

| Policy |  | FY 2005 |
| --- | --- | --- |
| Financial Incentives | Maximum benefit | 	$379* |
|  | Maximum earnings at application | 	$700* |
|  | Earnings at $0 benefit, month 1 | 	$1,143* |
|  | Earnings at $0 benefit, month 13 | 	$806* |
| Work-related sanctions | Adult removed | 	5 |
|  | Grant reduction | 	3 |
|  | Gradual full-family | 	24 |
|  | Immediate full-family | 	19 |
| Time limits | None | 	2 |
|  | Adult | 	4 |
|  | Full-family | 	39 |
|  | All extended (+ adult or ff time limit) | 	4 |
| Diversion | Program | 	27 |
|  | No program | 	24 |

***50****th**** percentile**

**Source: Urban Institute, Welfare Rules Database**

## California

**California**

**Notes:**
The implied change in the work participation rate if California had, in turn, each of the policies listed in the chart.

## US: Financial incentives simulations

| Participation | + |
| --- | --- |
| Non-participation | + |

**Notes:**
The implied change in the work participation rate if all states had, in turn, each of the policies listed in the chart.
C : comparison category
0 : statistically insignificant change
+ : significant, positive change
- : significant, negative change

## US: Sanctions simulations

| Participation | + | 0 | C | 0 |
| --- | --- | --- | --- | --- |
| Non-participation | + | 0 | C | - |

**Notes:**
The implied change in the work participation rate if all states had, in turn, each of the policies listed in the chart.
C : comparison category (significance of other sanction policies compared to gradual full-family)
0 : statistically insignificant change
+ : significant, positive change
- : significant, negative change

## US: Time limits simulations

| Participation | C | 0 | 0 | + |
| --- | --- | --- | --- | --- |
| Non-participation | C | 0 | - | 0 |

**Notes:**
The implied change in the work participation rate if all states had, in turn, each of the policies listed in the chart.
C : comparison category (significance of other time limit policies compared to no time limit)
0 : statistically insignificant change
+ : significant, positive change
- : significant, negative change

## US: Diversion simulations

| Participation | C | - |
| --- | --- | --- |
| Non-participation | C | - |

**Notes:**
The implied change in the work participation rate if all states had, in turn, each of the policies listed in the chart.
C : comparison category
0 : statistically insignificant change
+ : significant, positive change
- : significant, negative change

## US: Economy simulations

| Participation | + |
| --- | --- |
| Non-participation | - |

**Notes:**
The implied change in the work participation rate if all states had the best and worst economy of the FY 98-05 period.
C : comparison category
0 : statistically insignificant change
+ : significant, positive change
- : significant, negative change

## Outline

**Our Approach**
**Data**
**Results**
**Conclusions**

## Conclusions

**Some evidence that more stringent time limits and sanctions increase rates by reducing the non-participating caseload**
**Time limit extensions appear to increase the participating caseload, raising the rate**
**Diversion reduces both caseloads, lowering the rate**
**Financial incentives increase both, raising the rate**
**A good economy increases the participating caseload and reduces the non-participating caseload, raising the rate**

## Contact Information

**Public Policy Institute of California**
_**[www.ppic.org](http://www.ppic.org/)**__** **_
**Caroline Danielson**
**415 291-4462**
_**[danielson@ppic.org](mailto:danielson@ppic.org)**__** **_