Studies of Welfare Populations Data Collection and Research Issues (2002) / Chapter Skim
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13 Preexit Benefit Receipt of Employment Histories and Postexit Outcomes of Welfare Leavers
13 Preexit Benefit Receipt of Employment Histories and Postexit Outcomes of Welfare Leavers
Pages 415-472
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From page 415... ...
These questions prompted numerous studies of "welfare leavers," or those who stopped receiving welfare benefits. Most of these welfare leaver studies were conducted for monitoring purposes to inform policymakers and program administrators about the needs and experiences of those who had left welfare.
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From page 416... ...
suggested that as a crude means of standardizing descriptions of the caseload and the outcomes of leavers across time and across areas, outcomes could be stratified by the past welfare receipt history and past work experience of welfare leavers. Standardizing the composition of the caseload and the groups of the leavers would then make comparisons of outcomes of leavers across time and jurisdictions more credible because leavers with similar work and welfare receipt histories would be compared to each other.
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From page 417... ...
Section 5 examines the importance of past welfare receipt and work history measures in a multivariate setting. Probit models of the probability of leaving welfare and of being employed a year after leaving welfare, controlling for welfare and earnings histories, as well as demographic characteristics of leavers, are estimated.
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From page 418... ...
, stopped receiving benefits for 2 consecutive months.3 "Stayers" are those who did not stop receiving benefits for 2 consecutive months during the August 1995-August 1996 period. This period is referred to throughout the paper as the "exit period." The "preexit period" is between January 1989 and July 1995.
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From page 419... ...
Welfare History Variables The cases were categorized into groups based on each case's past welfare receipt history. This was done as a means to characterize the welfare caseload at the time the sample of leavers was drawn and as a means to standardize comparisons of outcome measures across different types of leavers.
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From page 420... ...
Work History Variables Earnings information from Unemployment Insurance records from first quarter 1989 to fourth quarter 1997 are used in this study. A variable for the percentage of quarters with any earnings in the preexit period was created and used to stratify outcomes (number of quarters from 1989 to 1995 with positive earnings divided by total number of quarters between first quarter 1989 and third quarter 1995~.
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From page 421... ...
public assistance receipt, such as whether the case returned to welfare and whether the case received other public assistance benefits (food stamps and medical assistance)
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From page 422... ...
Cases not appearing in public assistance records were assumed to not be receiving benefits. THE WELFARE RECEIPT AND WORK HISTORIES Because of dynamics in policy, economic conditions, and other social factors, the characteristics of those who receive welfare (and leave welfare)
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From page 423... ...
Table 13-2 is a slight variation on Table 13-1. Instead of reporting the total number of months of benefit receipt, Table 13-2 reports the average spell length (ASL)
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From page 424... ...
To capture the two concepts of average spell length and total number of spells in a less cumbersome way, three categories of welfare recipients were created: cyclers (more than two spells) , short-termers (fewer than two spells and TTO of less than 2 years)
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From page 425... ...
What is the relationship between work history and welfare receipt history? Tablel3-5 shows the distribution of work history across short-termer, long-termer, and cycler status.
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From page 426... ...
Throughout the rest of this paper, the short-term, long-term and cycler definitions of welfare receipt history and the categories of work history will be used to stratify outcomes of leavers and stayers. The distinctions are used to illustrate how the outcomes of leavers can vary by the characteristics of the people leaving the caseload at the time the welfare leaver sample is drawn.
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From page 427... ...
As a final measure of welfare receipt history, the average length of AFDC receipt spells was calculated for both leavers and stayers. The mean spell length in the preexit period of leavers was about 28 months compared to 41 months for stayers.
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From page 428... ...
(25.2) Median AFDC spell length 28 20 35 7/89 to 7/95 (in months)
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From page 429... ...
Employment, earnings, further public assistance receipt, and other outcomes of leavers will also vary widely across these AFDC receipt and work histories. TABLE 13-7 Leaving Rates for Recipients with Different Recipiency and Work Histories Percent of Total Sample in Subgroup Percent of Subgroup That Left Welfare Past welfare receipt history Short-termer Long-termer Cycler Percent of quarters with earnings (1/89-7/95)
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From page 430... ...
This section examines the use of public assistance by welfare leavers and stayers. Outcomes examined include the percentage who return to welfare and the percentage who receive food stamps and medical assistance after leaving welfare.
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From page 431... ...
Although no explanations were offered, it is possible that this group was particularly discouraged from returning to welfare by signals encouraging the end of welfare and emphasizing work that came out with the waiver and PRWORA legislation, along with real changes in how the Food Stamps Program treated legal immigrants. Most of the cases with no eligible adults are those where the AFDC case consists only of children, but the adult in the household is either on SSI or was sanctioned from AFDC.
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From page 432... ...
Alternatively, even though food stamp and medical assistance eligibility rules did not change much with waivers and PRWORA, recipients may be confused about the rules and think they are no longer eligible for food stamps or that work requirements and time limits for cash benefits also apply to food stamps and medical assistance receipt. Table 13-9 shows the percentage of leavers and stayers that received food stamps on a quarterly basis after leaving welfare, or since the third quarter of 1996 for stayers.
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From page 434... ...
434 Cal Cq Cq sol at .
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From page 435... ...
Medical assistance receipt also varies substantially by past welfare receipt history. Shorttermers are consistently less likely to receive medical assistance after leaving than long-termers and cyclers.
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From page 436... ...
22.2 26.8 18.2 21.7 Never worked 0.0 33.7 0 < x <= 25% 0.0 23.4 25 < x <= 50% 0.0 19.0 50 < x <= 75% 0.0 17.8 More than 75% of qtrs 0.0 19.0 Percent Not Receiving AFDC, Food Stamps or Medical Assistance in the Fifth Quarter after Initial Exit (3rd quarter 1997 for stayers) Overall By past welfare receipt history (7/89 to 7/95)
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From page 437... ...
All those who stayed on welfare received at least one of these three benefits. In the fifth quarter after leaving welfare, the percentage of leavers who no longer received benefits nearly doubled, as 43 percent received neither AFDC, food stamps, nor medical assistance.
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From page 438... ...
Employment, Earnings and Income Status After Leaving A major goal of welfare reform was to increase employment and earnings of the low income and welfare populations. In this section, we examine common employment and earnings outcomes reported in studies of welfare leavers and stratify these outcomes by the past welfare receipt and past employment histories of the caseload.
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From page 439... ...
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From page 440... ...
Results here suggest how widely those employment rates may vary. Differences in employment rates by past welfare receipt history are not as wide.
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From page 441... ...
Earnings The success of former welfare recipients in staying off welfare also depends on how much they can earn while working. Table 13-13 shows mean and median quarterly earnings of welfare leavers and stayers over the first four quarters after exiting welfare, or since the beginning of the third quarter of 1996 for stayers.
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From page 442... ...
Stayers All Leavers Overall Mean 786.1 1,642.1 Median 199.0 1,311.0 By past welfare receipt history (7/89 to 7/95) Short-termer Mean 870.8 1,616.2 Median 284.8 1,266.0 Long-termer Mean 741.0 1,657.0 Median 157.6 1,330.0 Cycler Mean 889.5 1,662.9 Median 325.7 1,373.5 By past earnings history: Percent of quarters with earnings (1/89 to 7/95)
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From page 443... ...
. Stayers All Leavers Overall Mean 1,678.1 2,386.5 Median 1,449.8 2,225.8 By past welfare receipt history (7/89 to 7/95)
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From page 444... ...
In doing so, they find that those who had more months of benefit receipt in the preexit period had the highest median quarterly earnings. We find a similar result for median quarterly earnings of welfare leavers, but little difference between short-termers and long-termers.
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From page 445... ...
Mean and median quarterly income for leavers and stayers across past welfare and work receipt are examined in this table. TABLE 13-15 Mean and Median Quarterly Income Over the Year Following Exit (income = AFDC benefits + food stamps + earnings in first four quarters after exit)
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From page 446... ...
This is a striking difference but not surprising given that stayers continued to receive benefits during the exit period, had lower overall earnings, and were more likely to receive food stamps throughout the year after the exit period. Looking at the subgroups of leavers by welfare receipt history, as expected, short-termers had the highest ETI ratios (73 percent)
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From page 447... ...
Cases With Multiple Barriers to Self-Suf~ciency In an attempt to estimate a lower bound on the outcomes of leavers, AFDC recipients that may face the most barriers to self-sufficiency were identified and their employment, earnings, and public assistance usage after leaving welfare were examined. High-barrier cases were identified by their education level, amount of time spent on welfare prior to the exit period, presence of young children, and employment experience prior to the exit period.l4 A case was clas14Other characteristics, of course, could be used to identify high-barrier cases (SSI status for mother and child, for example)
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From page 448... ...
However, this group of high-barrier cases still received public assistance from either food stamps, AFDC, or Medicaid. In the first quarter after exit, only 18 percent of high-barrier leavers did not receive public assistance.
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From page 449... ...
Mean 1,735.3 2,393.2 Median 1,593.5 2,235.2 Quarterly income from earnings, AFDC, and food stamps in the first year after exit Mean 1,523.2 Median 1,351.1 2,010.0 1.874.0 aHigh-barrier cases are those who, as of July, 1995: did not have a high school diploma, had at least one child under the age of 5, had received AFDC for more than 4 years between July 1989 and July 1995, and had worked four or fewer quarters between January 1989 and July 1989. bPercent of all cases designated "high-barrier cases" who left AFDC.
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From page 450... ...
This section assesses the importance of past welfare receipt and past earnings history, controlling for other demographic and economic variables on outcomes. The probability of leaving welfare and the probability of employment after leaving controlling for programmatic, demographic, and economic factors are estimated.
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From page 451... ...
The first model uses average spell length (ASL) and ASL-squared along with a series of dummy variables TABLE 13-18 Probit Estimates of the Probability of Leaving Welfare (N = 48,213)
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From page 452... ...
The sign of the coefficient and the marginal effect of each variable on the probability of leaving welfare are given. Model 1 uses ASL and its square and dummy variables for the number of spells of AFDC receipt to characterize past welfare receipt history.
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From page 453... ...
We expect that, controlling for all else, those with more work experience prior to leaving are more likely to be employed after leaving welfare. We also expect that those with shorter welfare receipt histories are more likely to be employed after leaving than those with longer welfare receipt histones.
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From page 454... ...
Average spell length Average spell length squared One spell of receipt Two or three spells of receipt Four or more spells of receipt (reference group is no prior spells) No earnings prior to leaving & short-term welfare recipient Some earnings prior to leaving & long-term welfare recipient No earnings prior to leaving & long-term welfare recipient Some earnings prior to leaving & cycler No earnings prior to leaving & cycler (reference group for this series is short-termers with earnings prior to leaving welfare)
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From page 455... ...
The model includes a series of dummy variables for the earnings and welfare receipt history of leavers. The third model combines the welfare receipt and work history variables.
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From page 456... ...
Status as a long-term AFDC user is positively associated with earnings after leaving and is statistically significant. This result holds even after controlling for the age of the leaver, prior work experience; and average quarterly earnings prior to leaving welfare, which is surprising because it is contrary to initial predictions that long-termers would have more barriers to self-sufficiency and have lower earnings after leaving.
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From page 457... ...
Average AFDC spell length Average AFDC spell length squared Total # of spells =1 Total # of spells=2 or 3 Total # of spells=4 or more Average quarterly earnings before leaving # Quarters with earnings before leaving Age of case head Age of case head squared Black Hispanic (reference group is white) No high school diploma At least some college (reference group is high school diploma)
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From page 458... ...
Predictions of Outcomes for High-Barrier Cases This section uses the coefficient estimates from the models predicting the probability of leaving welfare, the probability of employment after leaving, and earnings after leaving to predict each of these outcomes for different definitions of "high-barrier" cases.~7 Seven definitions of high-barrier cases are examined. The first is the same definition used earlier cases that had no high school diploma, received welfare for at least 48 months in the preexit period, fewer than four quarters of earnings in the preexit period, and had at least one child under the age of 5.
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From page 460... ...
For those who are high-barrier cases and who live in Milwaukee County the mean predicted probability of leaving welfare is 19 percent. This is nearly identical to the mean predicted probability of leaving for high-barrier cases that are also black (Definition 5~.
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From page 461... ...
These results indicate that even sanctioned high-barrier cases and high-barrier cases with SSI-eligible children have fairly high employment rates after leaving welfare and do not appear to have trouble finding employment after leaving welfare. Mean Predicted Quarterly Earnings After Leaving Welfare The last row in Table 13-21 shows mean predicted quarterly earnings for leavers under the different definitions of high-barrier cases.
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From page 462... ...
In general, we find that past welfare receipt history matters a great deal for outcomes, but not always as expected. We also find that those with more work experience prior to leaving were more likely to leave welfare and were much more successful in gaining employment and earnings after leaving welfare.
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From page 463... ...
Quarters worked and average wages in the preexit period were both positive and strong predictors of quarterly earnings after leaving welfare. We also found that past welfare receipt distinctions were important predictors of the probability of leaving welfare.
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From page 464... ...
A good explanation for these results is not clear. In summary, we conclude that in examining the outcomes of welfare leavers, it is important to characterize the caseload by their past work experience and by their past benefit receipt history because outcomes vary widely across different work experience and benefit receipt backgrounds.
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From page 465... ...
MICHELE VER PLOEG 465 Moffitt, R
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From page 466... ...
There are few differences in the characteristics of 2-month leavers and 3-month leavers. The differences are very small across all the demographic and past work and welfare receipt history variables.
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From page 467... ...
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From page 468... ...
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From page 469... ...
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From page 470... ...
This is as expected, because the group of 6-month leavers is probably composed of cases that are more selfsufficient than the group of 2-month leavers. There are only negligible differences in the work histories of 2-month, 3-month, and 6-month leavers.
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From page 471... ...
aDefinition 1: Average spell length - 6 months=short-termer; average spell length >6 = longtermer. bDefinition 2: Average spell length -12 months=short-termer; average spell length >12 = longtermer.
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From page 472... ...
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 5th Quarter After Exit After Exit After Exit After Exit After Exit All leavers N 19,912 18,803 18,987 19,375 19,815 Mean earnings 1,370 1,656 1,745 1,827 1,860 Median earnings 1,245 1,381 1,290 1,385 1,382 Short-term welfare user N 8,610 7,766 7,832 7,955 8,113 Mean earnings 1,575 1,647 1,687 1,741 1,787 Median earnings 1,017 1,117 1,127 1,154 1,185 Long-term welfare user N 8,264 7,729 7,795 7,955 8,139 Mean earnings 1,697 1,762 1,801 1,893 1,927 Median earnings 1,399 1,408 1,421 1,524 1,528 Cycler N 3,545 3,308 3,360 3,465 3,563 Mean earnings 1,656 1,702 1,752 1,871 1,874 Median earnings 1,381 1,352 1,338 1,553 1,482 TABLE 13-B3 Different Definitions of High-Barrier Cases Definition Definition Definition Definition Definition Definition 1 a 2b 3c 44 5e 6f Number 1,410 421 Percent of total sample 2.9 2.1 Number of leavers 344 27 Percent in 1,723 361 2,484 3,292 3.6 0.7 5.2 6.8 443 87 506 1,225 high-barrier definition who left AFDC 24.4 6.4 25.7 24.1 20.4 37.2 aDefinition 1 = Basic high-barrier definition: Did not finish high school, received AFDC for more than 48 months in 72 months prior to exit, had at least one child under the age of 5, worked four or fewer quarters in the preexit period. Definition 2 = Same as #1 except did not work at all in the preexit period.
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