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Welfare Reform and Family Expenditures: How are Single Mothers Adapting to the New Welfare and Work Regime?

May 2006

Neeraj Kaushal, Columbia University; Qin Gao, Fordham University; Jane Waldfogel, Columbia University

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We study the effect of welfare reform, broadly defined to include social policy changes in the 1990s, on the material well-being and consumption patterns of poor single-mother families using the Consumer Expenditure Surveys. We find that welfare reform did not have any statistically significant effect on total expenditures in households headed by low-educated (education high-school) single mothers. However, patterns of expenditure did change. There is strong evidence that the policy change was associated with an increase in spending on transportation and food away from home, and some evidence of an increase in spending on adult clothing and footwear. Welfare reform was also associated with an increase in ownership of microwave ovens, phones and cars. These increases were higher, in absolute as well as relative terms, among families headed by very low educated (education < high-school) single mothers. In contrast, we find no statistically significant changes in expenditures on childcare or learning and enrichment activities, and, if anything, a relative decline in ownership of computers in low-educated, single mother households. This pattern of results suggests that welfare reform has shifted affected families’ expenditures towards items that facilitate work outside the home, but, at least so far, has not allowed families to catch up in terms of their expenditures on learning and enrichment items.

Welfare Reform and the Administration of Welfare Programs