The Effects of Vehicle Asset Rules on Vehicle Assets.

Before 1996, households were typically ineligible for welfare if they had assets worth more than $1,000, where $1,500 from each vehicle’s value was excluded from this determination. However, the 1996 welfare reform act began allowing states to increase their asset limits and vehicle exclusions. This may prompt low-income households to reallocate resources to or from vehicles. We examine the effects of state vehicle asset rules on vehicle assets. Results show liberalizing asset rules increases vehicle assets and that this increase is driven largely by eligible individuals increasing vehicle assets, with no evidence indicating ineligible individuals reduce vehicle assets to become eligible.