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Did Welfare Reform End the Safety Net as We Knew It? The Record since 1996

Author

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  • Lucie Schmidt
  • Lara Shore-Sheppard
  • Tara Watson

Abstract

This paper examines the evolution of the safety net for low-income families since welfare reform in 1996 promised to "end welfare as we know it". The total package of supports has become substantially more generous, but has changed in character. Support has shifted away from monthly cash transfers towards tax credits and in-kind benefits, and has expanded for working families while declining for those without earnings. Resources available to married-parent families have expanded, whereas those for adults without dependents remain scant. We also document that, despite expanded state flexibilities, variability in generosity across states did not grow due to simultaneous expansions of federal food assistance and tax credits. Overall, these changes reflect ongoing contention over two key policy issues. First, what is the appropriate trade-off between promoting work versus preventing material hardship? Second, what is the appropriate role for states versus the federal government in determining safety net generosity?

Suggested Citation

  • Lucie Schmidt & Lara Shore-Sheppard & Tara Watson, 2025. "Did Welfare Reform End the Safety Net as We Knew It? The Record since 1996," Journal of Economic Perspectives, American Economic Association, vol. 39(1), pages 101-128, Winter.
    • Handle: RePEc:aea:jecper:v:39:y:2025:i:1:p:101-28
    DOI: 10.1257/jep.20231392
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    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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