THE IMPACT OF WELFARE REFORM ACROSS METROPOLITAN AND NON-METROPOLITAN AREAS: A NON-PARAMETRIC ANALYSIS

Recent public cash assistance reform measures designed to induce recipients to leave welfare and enter the workforce represent the most important change in social welfare policy in recent decades. Single female-headed families with children (SFHFwC), who represent 53 percent ofnon-metropolitan families with children living below the poverty line, are the major target group of reform measures. Recent studies have expressed concerns that heads of SFHFwC may face particular difficulties in transiting from welfare to work in non-metropolitan areas due to relatively weak demand for low skill female labor, greater childcare and transportation barriers to workforce participation, and economies of scale in the delivery of public programs to assist in transition. Despite these concerns, non-metropolitan SFHFwC have shown significant improvements in a number of economic indicators of family welfare since the initial implementation of reforms. However, the underlying causes of economic gains, and the relationshipbetween gains and reform measures, remains unclear. This paper examines shifts from 1993 to 1999 in the distribution of real per-capita total receipts of non-metropolitan and metropolitan area SFHFwC with data from the U.S. Current Population Survey Annual Demographic Files. Nonparametric density estimates reveal a significant positive rightward shift in the per-capita distribution of total receipts ofnon-metropolitan SFHFwC occurred from 1993 to 1999. These gains are largely attributable to a rightward shift in the distribution of the earnings portion of total per-capita receipts, as the public assistance component of total receipts shifted leftward over the same period. The contributions of structural change in workforce – welfare participation as well as underlying individual and area attribute shifts, are then examined using nonparametricdensity re-weighting methods. Specifically, five counterfactual experiments are conducted. The first experiment simulates the counterfactual distribution of non-metropolitan 1999 per-capita total receipts if the frequency of workforce – welfare participation states in the1999 data were at 1993 levels, but the distribution of per-capita receipts within each of four possible states of workforce and welfare participation remained at 1999 levels. The second counterfactual density simulates the 1999 non-metropolitan area distribution of per-capita receipts that would have prevailed if structural relationships between workforce – welfare participation decisions and area and individual attributes were at 1993 levels, but area and individual attributes remained at 1999 levels. The third counterfactual experiment simulates the 1999 distribution ofper-capita receipts that would have prevailed with both the 1993 structural relationship between workforce – welfare participation and area and individual attributes and 1993 area and individual attribute levels. The fourth counterfactual experiment simulates 1999 distributions of per-capita receipts that would have prevailed if area unemployment and individual attributes in each workforce – welfare state remained at 1993 levels, but the distribution of workforce – welfare states were at 1999 levels. Thefinal counterfactual density presents the 1999 per-capita receipts distribution that would have prevailed with 1999 workforce – welfare participation rates arising from 1993 levels of unemployment in non-metropolitan areas. These experiments suggest that structural change in the relationship between area and individual attributes and workforce – welfare program participation decisions from 1993 to 1999 accounts for only a small portion of observed shifts in total per-capita receipts. Changes in individual and area attributes, by contrast, account for much of the observed rightward shift in non-metropolitan per-capita total receipts from 1993 to 1999. Further, SFHFwC economic gains appear to arise from increased education levels and other individual attribute shifts, rather than more favorable area economic conditions. Gains should, therefore, be relatively resilient to future area economic downturns.