Swann, Christopher A. 2005. “Welfare Reform When Recipients Are Forward-Looking.” Journal of Human Resources 40(1): 31-56.

In 1996 the Aid to Families with Dependent Children program was replaced with the Temporary Assistance for Needy Families (TANF) program. This paper considers the effects of two specific components of TANF, time limits and work requirements, on employment, marriage, and welfare participation. I use a discrete-choice dynamic programming model and obtain parameter estimates using data from the Panel Study of Income Dynamics. Policy simulations show that a five-year lifetime time limit results in a 60 percent reduction in welfare use and that a substantial part of this reduction occurs because recipients are forward-looking.

Christopher A. Swann is a professor of economics at UNC-Greensboro, Greensboro, N.C. This paper has been substantially improved by comments from Todd Stinebrickner and two anonymous referees. The author acknowledges helpful comments on previous versions of this paper from Steven Stern, Michael Brien, Fredrick Holt, Edgar Olsen, and numerous seminar participants. He claims responsibility for all remaining errors. The data used in this article can be obtained beginning October 2005 through September 2008 from Chris Swann, Department of Economics, Box 26165, UNC-Greensboro, Greensboro, N.C. 27412 <chris_swann@uncg.edu>.