The Effect of the AFDC Guarantee on Family Income
Amy Butler Principal Investigator
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This study addresses the effect of income support, in the form of Aid to Families with Dependent Children (AFDC), on the poverty of children in single-parent families. The Principal Investigator draws on a large, longitudinal data set (the Panel Study of Income Dynamics), collected over twenty-one years, to test the hypothesis that generous welfare benefits undermine the work ethic of recipients and thereby contribute to the growth of an underclass in the United States. Since the AFDC guarantee (the amount of money paid to single-parent families with no other source of income) varies by state and within states over time, this research can investigate whether higher AFDC guarantees ameliorate or perpetuate poverty, and the conditions under which either outcome is likely. The findings from this study can contribute information as to the optimal level for welfare benefits. It can also shed light on an issue of vital concern among policy makers, that higher welfare benefit levels may hurt rather than help the poor in the long run.