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New research shows that the success of Bill Clinton’s landmark reform came at a price
AS THE ROSTER of Democratic candidates for the 2020 presidential elections grows, plans for welfare reform proliferate alongside it. Senator Kamala Harris of California, for example, has proposed a federal cash transfer for some low-income families. Ideas like this build on growing evidence that the last big reform of welfare—the 1996 Personal Responsibility and Work Opportunity Reconciliation Act—failed to fully deliver on its promise. While the law did push people off the welfare rolls and into work, it also increased the number of Americans who are cash poor. New research suggests that has had a damaging effect on the behaviour of their children.?
The key features of that law were to time-limit welfare payments and add work requirements. At the time, Bill Clinton said he signed the legislation, product of a Republican-controlled Congress, because “the current welfare system undermines the base values of work, responsibility and family, trapping generation after generation in dependency." And the evidence suggests that the conditions did cut welfare rolls and increase employment overall, especially among the single mothers who were targeted by the legislation. The number of American families receiving cash assistance fell from 5.1m in 1994 to less than 2m by 2007. Employment of low-skilled women increased by as much as 27%.?
But while the employment income of unmarried mothers increased by 25% between 1993 and 2002, welfare income fell 80%. This almost certainly reduced total after-tax and transfer incomes, with the effects concentrated among poorer single mothers. After 1996, the number of extreme-poor American households living on a cash income of less than $2 per day per person climbed, reaching 1.65m households in 2011.
In a new paper, Dhaval Dave, an economist, and his colleagues examine the effects of the reform on the “culture of poverty”—the idea that “welfare leads to an intergenerational cycle of irresponsible behaviour"—by looking at the social behaviour of the children of low-skilled single mothers. They compare this with the behaviour of children from families unlikely to have been affected by welfare reform. And they use the fact that many states began implementing work requirements and time limits on welfare payments before the 1996 act to separate out the effects of broader economic trends from the impact of welfare reform.?
The authors found that girls in households exposed to the reform were slightly less likely to volunteer after the reform than before. Boys and girls exposed to welfare reform were also significantly more likely to skip school, and boys were also more likely to damage property or become involved in a fight. Both boys and girls were more likely to smoke tobacco and marijuana, and boys also increased their use of other illicit drugs.
Why? The problem does not seem to be that parents, pushed into the labour force by reforms, are spending less time on parenting; the researchers suggest that the problem may be the quality of parental engagement rather than its quantity. Perhaps greater financial stress at home had made the difference. Whatever the reason, they conclude that any short-term gains from welfare reform may have come at a cost to the next generation, leading to more of the type of behaviour associated with a “culture of poverty” that the reform was meant to combat.