NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Immigrant and Native Responses to Welfare Reform

"There is no evidence of the much publicized 'chilling' effect, which anticipated that qualified welfare applicants might be frightened off by the debate and controversy surrounding welfare reform."

Approximately 13.5 million legal immigrants, along with some 5 million illegal immigrants, came to the United States between 1981 and 1996, rivaling only the wave of immigration that occurred between 1900 and 1920. These immigrants were less educated than their predecessors and were more likely to use Aid to Families with Dependent Children (AFDC) and other welfare programs than were immigrants who arrived in the 1970s. They also participated in welfare programs more than native citizens did. This situation led to widespread concern that new immigrants were a fiscal drag on the economy, consuming more than they were producing. It created a backlash that culminated in the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, which denied legal immigrants arriving after passage of the law receipt of most federally funded benefits.

In Immigrant and Native Responses to Welfare Reform (NBER Working Paper No. 8541), authors Robert Kaestner and Neeraj Kaushal compare the effect of PRWORA on the employment, hours of work, and marriage rates of three groups of low-educated women: foreign-born citizens, foreign-born non-citizens, and native-born citizens. Because some states created locally-funded programs to insure that all legal immigrants, including those arriving after passage of PRWORA, remained eligible for cash assistance benefits similar to federal benefits under the Temporary Assistance to Needy Families (TANF) program, the authors also compare the response of foreign-born non-citizens between states. In that way, they test whether the immigrant provisions of PRWORA had a "chilling" effect on immigrant program participation and employment

The authors find that PRWORA encouraged native-born citizens and foreign-born non-citizens to increase their employment and their attachment to the labor market. TANF had a larger effect on the least educated native-born women. Among foreign-born non-citizens, TANF had a larger effect on more recent arrivals. The authors also find that there is no evidence of the much publicized "chilling" effect, which anticipated that qualified welfare applicants might be frightened off by the debate and controversy surrounding welfare reform. Instead, actual eligibility for benefits is the more critical determinant of the behavioral response to welfare reform.

TANF and AFDC waivers had no effect on the marriage decisions of native-born and foreign-born citizens. TANF was associated with a decrease in the marriage rates of foreign-born non-citizens.

-- Les Picker


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