The Effects of Work Requirements on the Employment and Income of Welfare Recipients

Experiments conducted in the mid-1990s show that a combination of work requirements and work supports substantially increased the employment of cash assistance recipients in Aid to Families with Dependent Children, the predecessor program to Temporary Assistance for Needy Families (TANF) while having little effect on recipients’ average income. There is little evidence on the effects of TANF’s work requirements, though, and recent research on other means-tested programs demonstrates that their work requirements have had little effect on employment and have substantially reduced the number of people receiving the benefits they provide. I use administrative data to examine how Alabama’s recent expansion of its TANF work requirement to the parents of children between the ages of 6 months and 11 months affects their employment and income. I find that recipients of TANF in Alabama begin searching for jobs earlier, which leads to an increase of 11 percentage points in their employment rate during the months they are in TANF. In addition, the requirement increases their earnings but reduces the amount of cash assistance they receive, primarily by removing nonworking families from the program. On net, my analysis suggests that average income rises for TANF recipients in Alabama but so does the frequency with which families have neither earnings nor cash assistance