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

Abstract

We study the effect of welfare reform, broadly defined to include social policy changes in the 1990s, on the material well-being and expenditure patterns of poor single-mother families. Our research suggests that welfare reform did not affect total expenditures in households headed by low-educated single mothers. However, patterns of expenditure did change. We find strong evidence that the policy 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. In contrast, we find no statistically significant changes in expenditures on childcare or learning and enrichment activities. This pattern of results suggests that welfare reform has shifted family expenditures towards items that facilitate work outside the home, but, at least so far, has not allowed families to catch up with more advantaged families in terms of their expenditures on learning and enrichment items.