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This paper received the third place for Senior Thesis for "Welfare Caseloads and the 2001 Recession" under the supervision of Karine Moe, at the 2005 annual conference of the Minnesota Economic Association held recently at the University of St. Thomas in St. Paul, MN.


This paper investigates the effects of welfare reform policies on the number of families receiving welfare (caseloads) since the 2001 recession. 1996's welfare reform legislation was passed amidst the longest economic expansion in US history, making it hard for researchers to estimate the role of policy. Furthermore, caseload research has not sufficiently explored the effects of specific policy choices within a broader reform package. This paper uses state panel data to examine the effects of specific policies on caseloads since the recession. Results indicate that since the 2001 recession, generous financial incentives to work reduced the number of families on welfare, while time limits and punishments for non-compliance had no impact. Taken as a whole, welfare reform helped move low-income women off of welfare in the 90s boom and subsequent recession.



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