Welfare dependence and recidivism in an era of welfare reform

Abstract

This study examines the dynamics of welfare programme participation during the initial period (1993–1995) of programme reforms at the state-level in Iowa. The programme changes for the state were remarkably similar to the national reforms implemented in the USA in 1996. Analysis of the Family Investment Program (FIP) participation over the programme's first two years show that, on average, recipients stayed fewer months in the second year compared with the first, although a relatively large share of participants (36%) stayed on for the full two years. Fixed effect and semiparametric duration models are used to examine welfare dependence and recidivism, respectively. Results indicate that income from wages and child support are significant factors in reducing welfare participation. Child support and wage income are crucial in determining the chances of exiting and of staying off the programme, especially during the early months of the exit.