What Goes Up Must Come Down? Explaining Recent Changes in Public Assistance Caseloads

Over the past decade, public assistance caseloads have increased rapidly to an historical high point and then decreased with even greater speed to their lowest level in decades. Several recent papers have focused on the rise in Aid to Families with Dependent Children (AFDC) caseloads in the early 1990s and the turn-around in the mid-1990s. This research indicates that both macroeconomic factors and program factors appear to be important for these changes. A key question is whether these recent declines are permanent, and how much they might turn around in a more sluggish economy. This paper focuses on the relationship between recent caseload changes and the overall economy, comparing estimates from a wide variety of models using both annual and monthly data. By using monthly data, which is available through late 1998, this paper also presents several rough estimates of the impact of welfare reform post-1996. The Food Stamp program has also experienced major program changes, although it has remained relatively unchanged for single mothers and their children who once participated in AFDC. This paper also provides a detailed comparative analysis of AFDC/TANF caseload changes with Food Stamp caseload changes.