Baruch Professors O'Neill and Korenman Release Study Linking Welfare Reform and Poverty Reduction
New York, NY --
According to a new study conducted for the Manhattan Institute
by Baruch College professors June O'Neill (Economics and Finance)
and Sanders Korenman (Public Affairs), Clinton-era welfare
reform has played a significant role in the reduction of child
poverty in the United States, especially among black and latino
populations. These findings, the authors say, belie the theory
that 1990s welfare reform would drive destitute mothers and
children into deeper poverty. The study covers the years 1993
to 2001.
The study, released last week, is entitled Child Poverty
and Welfare Reform: Stay the Course. It states that
up to one half of the record decline in child poverty during
the late 1990s was influenced by welfare reform. By 2001,
the child poverty rate had fallen 6 percentage points from
its 1993 peak, a 27% decline, to its lowest level since the
mid-1970s. The decline in child poverty was particularly dramatic
among black and Hispanic children. Between 1993 and 2002,
the poverty rate among black and Hispanic children declined
by almost one-third, far exceeding historical trends.
Welfare reform deserves much of the credit for the reduction
in child
poverty as a result of increased work among single mothers,
the group
most affected by welfare reform, the study says. Parental
behavior spurred by welfare reform can take credit for as
much as half of the decline in poverty among children in single-mother
families, if, in addition to the increase in single mothers’
employment, we attribute part of the changes in family size
and living arrangements to incentives produced by welfare
reform. Doctors O’Neill and Korenman believe that there
is no need to diminish the emphasis on work requirements and
time-limited benefits, nor is there a need to legislate an
increase in the number of hours of work required by welfare
recipients. Welfare reform should stay the course. In sum,
the study found that up to one half of the decline in child
poverty was heavily influenced by welfare reform.
Groups with the largest declines in poverty, for example black
and Hispanic children and children in female-headed households,
were more likely than other children to be positively affected
by welfare reform· The late 1990s reveal substantial
gains in the economic well being of children that cannot be
accounted for by normal economic fluctuations· The
employment and earnings gains among single mothers would likely
not have been achieved without welfare reform· Among
black and Hispanic children living in single mother households,
the increase in mother-employment accounted for an exceptionally
large percentage (almost 40%) of the decline in child poverty·
There was an increase in the proportion of children living
in two-parent households for black and Hispanics, which further
reduced poverty levels. Other important factors contributing
to the decline in child poverty include:
- Increase in parental education
- Increase in wage rates of low-skilled workers in the U.S. economy
- Decrease in number of children per family
Methodology
Using multiple regression analysis, the authors estimated
the
contribution of these factors to the decline in poverty. O’Neill
and Korenmann regressed the poverty rate of a child on a standard
set of
demographic and geographic controls. The analysis also included
controls for the level of welfare benefits in the state and
for local labor
market indicators most pertinent to low-income households,
including the state unemployment rate and the hourly wage
rate for workers with no more than a high school education.
“Since the 1996 welfare reform, the overall poverty
rate has dropped 9
percent- despite the 2001 recession—with even steeper
declines in child poverty. This report reaffirms what we’ve
known all along—welfare reform has provided families
with a hand up out of poverty,” said Ways and Means
Human Resources Subcommittee Chairman Wally Herger (R-CA).
“Work-based welfare reform has been a huge success for
millions of families and Congress is long overdue in its responsibility
to provide families that remain on welfare more tools to help
them leave poverty and achieve independence.”
A copy of Child
Poverty and Welfare Reform: Stay the Course is available
on the Manhattan Institute website, at http://www.manhattan-institute.org/html/cr_44.htm
June O’Neill is Wollman Professor of
Economics at Zicklin School of
Business and director of the Center for the Study of Business
and Government, Baruch College, City University of New York
(CUNY). She also chairs the Board of Scientific Counselors
of the National Center for Health and Statistics and is research
associate of the National Bureau of Economic Research. She
served as director of the Congressional Budget Office, 1995-1999.
Sanders Korenman is professor in the School
of Public Affairs, Baruch College, CUNY, and a research associate
of the National Bureau of Economic Research. He served in
the Clinton Administration as Senior Economist of Labor, Welfare
and Education for the Council of Economic Advisors.
The Manhattan Institute, a 501(c)(3), is
a think tank whose mission is to develop and disseminate new
ideas that foster greater economic choice and individual responsibility.
Contact:
Mackenzie Chambers
Press Officer,
Manhattan Institute
212-599-7000, ext. 313
mchambers@manhattan-institute.org
