Welfare Time Limits in the United States – Experiences with a New Welfare-to-Work Approach

This paper reviews the evidence on welfare time limits in the United States. It primarily refers to experimental and econometric evaluations. Time limits affect welfare recipients both before and after their limits are reached. Time limits reduce welfare receipt and increase employment before recipients reach the limit, as recipients "hoard" their months of eligibility for future use. Once recipients begin to exhaust their benefit entitlements, welfare use falls sharply. A large proportion of time-limit leavers, however, continues to receive Food Stamps, Medicaid, etc. The impact on employment is mixed. Income effects change from positive to neutral in subsequent periods.