Welfare to Work in the U.S.: A Model for Other Nations?

Abstract

The 1996 welfare reform legislation establishing the Temporary Assistance for Needy Families (TANF) program marks a significant change in U.S. social and economic policy. This legislation represents the ascendance of the view that individuals and families need to be self-reliant and that collective support for individual well-being should be minimized. We first describe the major provisions of TANF, providing some background on its differences from prior policy targeted at needy families. Then we catalogue the wide variety of economic changes that are implicit in the new law, stressing those related to changed property rights, fiscal relations among jurisdictions, and economic incentives facing families. Third, we illustrate the form of state reforms that are likely to develop in response to the federal policy change by describing the actions of the state of Wisconsin, which has taken the lead in implementing the new policy. We conclude with a list of yet unanswered questions that will ultimately determine just how far this policy change will slide the nation along the efficiency-equity tradeoff function, away from the equity axis. The answer to these questions will influence the attraction the U.S. reform might hold as a model for other nations concerned with their own safety net programs for poor people.