Means-Tested Transfer Programs in the United States
edited by Robert A. Moffitt
University of Chicago Press, 2003
Cloth: 978-0-226-53356-8 | Electronic: 978-0-226-53357-5


Few United States government programs are as controversial as those designed to aid the poor. From tax credits to medical assistance, aid to needy families is surrounded by debate—on what benefits should be offered, what forms they should take, and how they should be administered. The past few decades, in fact, have seen this debate lead to broad transformations of aid programs themselves, with Aid to Families with Dependent Children replaced by Temporary Assistance to Needy Families, the Earned Income Tax Credit growing from a minor program to one of the most important for low-income families, and Medicaid greatly expanding its eligibility.

This volume provides a remarkable overview of how such programs actually work, offering an impressive wealth of information on the nation's nine largest "means-tested" programs—that is, those in which some test of income forms the basis for participation. For each program, contributors describe origins and goals, summarize policy histories and current rules, and discuss the recipient's characteristics as well as the different types of benefits they receive. Each chapter then provides an overview of scholarly research on each program, bringing together the results of the field's most rigorous statistical examinations.

The result is a fascinating portrayal of the evolution and current state of means-tested programs, one that charts a number of shifts in emphasis—the decline of cash assistance, for instance, and the increasing emphasis on work. This exemplary portrait of the nation's safety net will be an invaluable reference for anyone interested in American social policy.


Robert A. Moffitt is a professor in the Department of Economics at Johns Hopkins University. He has edited or coedited several volumes concerning various aspects of the welfare system in the United States, most recently Evaluating Welfare Reform in an Era of Transition.



- Robert A. Moffitt
DOI: 10.7208/chicago/9780226533575.003.0001
[transfer programs, expenditures, means-tested transfers, United States]
The National Bureau of Economic Research convened a conference in Cambridge, Massachusetts, on 11–12 May 2000 to hear papers delivered on the major transfer programs in the United States. Sponsored by the Smith–Richardson Foundation, the conference included papers on each major program in the country. Each served the triple purpose of explicating the institutional history and current rules of the program; describing its current caseloads, expenditures, and recipient characteristics; and summarizing recent research on each program. This volume contains revised papers from that conference. This introductory chapter first provides an overview of trends in expenditures in means-tested transfers in the United States over the last three decades. It then provides an overview of the subsequent chapters. (pages 1 - 14)
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- Jonathan Gruber
DOI: 10.7208/chicago/9780226533575.003.0002
[Medicaid program, program history, enrollment, expenditure, economic impact, health care utilization, labor supply, family structure]
This chapter reviews the structure of the Medicaid program and its economic impact. Section 1.1 begins by reviewing the program's history, and discussing the evolution and current structure of program rules. Section 1.2 then turns to a more detailed discussion of the program as it currently exists, presenting a variety of statistics on enrollment and expenditures. Section 1.3 provides a heuristic overview of the economic impacts of the Medicaid program, and Section 1.4 reviews the large empirical literature on the Medicaid program and its impacts on health care utilization, health, labor supply, family structure, and other behaviors. Section 1.5 discusses current policy issues and how they are informed (or not informed) by the existing literature, and Section 1.6 concludes. (pages 15 - 78)
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- Mary C. Daly, Richard V. Burkhauser
DOI: 10.7208/chicago/9780226533575.003.0003
[federal assistance program, SSI program, disabled, cash assistance program]
Supplemental Security Income (SSI) is a nationwide federal assistance program for aged, blind, and disabled individuals with low incomes. The SSI program was enacted in 1972 and began paying benefits in 1974. Since that time, SSI has grown to become the largest federal means-tested cash assistance program in the United States, with a caseload dominated by children and working-age adults with disabilities. This chapter provides the basic information necessary for SSI policymakers to make informed choices about its future, and is organized as follows. Section 2.2 reviews the program's history and describes the structure and evolution of SSI program rules. Section 2.3 provides expenditure, caseload, and program recipient statistics. Section 2.4 summarizes the primary economic issues related to the SSI program. Section 2.5 reviews the empirical evidence regarding these issues, and Section 2.6 summarizes the findings. (pages 79 - 140)
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- V. Joseph Hotz, John Karl Scholz
DOI: 10.7208/chicago/9780226533575.003.0004
[means-tested programs, refundable tax credits, program statistics, EITC, labor participation, compliance, marriage, fertility, skill formation, consumption]
The Earned Income Tax Credit (EITC) has been one of the fastest-growing means-tested programs in the country. It provides a refundable tax credit to families with earnings that can be as high as $3,800 a year (1999). This chapter is organized as follows. Section 3.2 reviews the political history of the EITC, its rules, and its goals, and provides a broad set of program statistics that summarize its growth and coverage. Section 3.3 provides EITC program statistics. Section 3.4 outlines the conceptual underpinnings of much of this recent work and discusses EITC participation and compliance, its effects on labor force participation and hours of work, marriage and fertility, skill formation, and consumption. Section 3.5 reviews the evidence to date on these behavioral issues. The final sections briefly discuss EITC-related policy debates; highlight what, if any, critical economic issues underlie these debates; and identify issues on which future research is needed. (pages 141 - 198)
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- Janet Currie
DOI: 10.7208/chicago/9780226533575.003.0005
[FANP, means-tested programs, Food Stamp Program, Supplemental Nutrition Program, School Lunch Program]
The U.S. government operates a wide variety of food and nutrition programs (FANPs), which reach an estimated one out of every five Americans every day. Most FANPs were developed with the primary goal of assuring adequate nutrient intakes in populations deemed to be at risk of undernutrition. A secondary goal of many FANPs is to improve the nutritional choices of recipients through nutrition education. This chapter focuses on the three largest programs: The Food Stamp Program, The Special Supplemental Nutrition Program for Women, Infants, and Children, and the National School Lunch Program. It is organized as follows. Section 4.2 provides a brief overview of the history, rules, and program statistics of these three programs. Sections 4.3–4.7 offer an evaluation of the evidence from these three programs regarding the overall effectiveness of FANPs; factors affecting take-up; the efficacy of in-kind versus cash programs; work disincentives created by the programs; and the role of nutrition education as compared to simple changes in budget constraints. Section 4.8 concludes with a discussion of current policy issues and suggestions for future research. (pages 199 - 290)
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- Robert A. Moffitt
DOI: 10.7208/chicago/9780226533575.003.0006
[TANF program, Aid to Families, Work Reconciliation Act]
The Temporary Assistance for Needy Families (TANF) program was created by legislation passed by the U.S. Congress and signed by the president in 1996. The Personal Responsibility and Work Reconciliation Act created the TANF program out of the preexisting Aid to Families with Dependent Children (AFDC) program, which itself was created by Congress in 1935 as part of the Social Security Act. This chapter examines the rules and structure of the TANF program, and compares them with the historical AFDC program. In addition, it reviews the caseloads, costs, and participation rates of the TANF and AFDC programs, and finally, the research that has been conducted on both programs. (pages 291 - 364)
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- Edgar O. Olsen
DOI: 10.7208/chicago/9780226533575.003.0007
[housing programs, low-income families, housing subsidies, consumption, labor supply]
This chapter reviews the complex mix of housing programs for low-income families in the United States. The objectives of the study are to (a) consider the arguments that have been offered for housing subsidies to low-income households and the implications of valid arguments for the evaluation and design of housing programs; (b) describe the most important features of the largest rental housing programs for low-income households in the United States; (c) summarize the empirical evidence on the major effects of these programs; and (d) analyze the most important options for reform of the system of housing subsidies to low-income households. The effects of these programs to be considered include: effects on the housing occupied by recipients of the subsidy and their consumption of other goods; effects on labor supply of recipients, the participation rates of different types of households, the distribution of benefits among recipients and all eligible households; effects on the types of neighborhoods in which subsidized households live, and of subsidized housing and households on their neighbors; and effects on the rents of unsubsidized units and the cost-effectiveness of alternative methods for delivering housing assistance. (pages 365 - 442)
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- David M. Blau
DOI: 10.7208/chicago/9780226533575.003.0008
[early education subsidy, low-income families, means-tested transfer]
Child care and early education subsidies for low-income families make up a relatively small but growing share of the portfolio of government means-tested transfer programs in the United States. The federal and state governments are estimated to have spent at least 18 billion dollars on such subsidies in fiscal year 1999. This chapter describes child care and early education subsidy programs in the United States; discusses the rationale for such programs and the economic issues raised by their existence and structure; reviews evidence on the effects of the programs on the behavior and outcomes of low-income families; and discusses proposals for the reform of such programs. (pages 443 - 516)
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- Robert J. LaLonde
DOI: 10.7208/chicago/9780226533575.003.0009
[employment training policy, unemployed, poor, JTPA, Investment Act, CETA, government training programs]
This chapter, which describes employment and training policies in the United States, and follows the key developments in them during the last forty years, touches briefly on some of the methodological developments that the evaluations of these policies have produced. It surveys some of the principal empirical findings in the literature on the effectiveness of these programs. During the last four decades, policymakers have made modest investments in a variety of employment and training services designed to improve the skills and employment prospects of the economically disadvantaged and unemployed. In fiscal year 1998, the federal government spent about as much on the Job Training Partnership Act (JTPA) as it did on programs like the Special Supplemental Nutrition Program for Women, Infants, and Children; and Head Start, child care, development block grants, and the school lunch program. Government training programs under the Workforce Investment Act, JTPA, and the Comprehensive Employment and Training Act (CETA) differ from other programs covered in this volume, because (a) they are not necessarily limited to low-income people and (b) low-income people are not necessarily entitled to receive these services. (pages 517 - 586)
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- Robert I. Lerman, Elaine Sorensen
DOI: 10.7208/chicago/9780226533575.003.0010
[child support policies, Child Support Enforcement, public transfer program, low-income families, child support payments]
This chapter, which examines child support policies, especially the activities of the Child Support Enforcement (CSE) Program, and how they interact with transfer policies and affect the low-income population, is organized as follows. Section 9.2 reviews the history of the CSE program, its rules, and objectives. Section 9.3 considers the economic rationale for government's role in child support. Section 9.4 describes trends in child support awards and payments. Section 9.5 discusses the importance of child support to low-income families. Section 9.6 examines the capacity of noncustodial parents to pay child support. Section 9.7 discusses the trends in costs and effectiveness of the child support program. Section 9.8 reviews the financing of this program. Section 9.9 examines the effects of child support incentives on behavior. Section 9.10 discusses remaining equity issues within child support. Section 9.11 considers several reform proposals. The final section draws conclusions about directions for the future of child support policies. (pages 587 - 628)
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Author Index

Subject Index