Short-Sighted?

According to this research, welfare reform caused adult women to reduce their education:

Welfare reform undermined, Free Exchange: Getting poor mothers off welfare and into employment as quickly as possible seems to be a useful policy goal. But a new paper by economists Dhaval Dave, Nancy E Reichman, and Hope Corman suggests it can be short-sighted.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 limited the time mothers could spend on welfare and required some work as a condition for receiving it. The reforms were, by most measures, successful at reducing the number of women on welfare and increasing their levels of employment. ... But..., the authors ... found that the reforms made adult women less likely to pursue education.

The reforms do not penalise minor (under 18) women who still attend school. Actually, the reforms encourage the younger women to finish their education. To receive some of the government funds, single, minor mothers must attend high school or some training program. The authors found this incentive decreased the teen dropout rates of the population between 9 and 13%.

By contrast, the reforms aimed at adult women, which promoted work and not training, made education less attractive. The authors found the reforms decreased the probability of adult women attending high school or college by 20 to 25%.

The number of welfare claims unambiguously decreased, but at what cost? More education increases the value of your human capital which leads to higher wages and more self-sufficiency. The authors wonder if discouraging education might ultimately leave the women more dependent on state benefits than they would if education were encouraged. The trade-off is a classic example of the choice of short-term gain and long-term pain.

Comments

[Don Quijote]

Giving Money to poor black people, Welfare Queens driving Welfare Cadillacs, you must be kidding.

[lonesome moderate]

Well, it's been twelve years now. If the changes did lead to greater long-term dependence on government benefits then I would think it would be possible to establish that directly.

[Ninja Zombie]

Interesting. But it begs the question: is more education a good thing?

It's not obvious whether education *increases* human capital, or merely *signals* existing high human capital. If it is the latter, then there is little value in further education for people on (or off) welfare. We would be better served by constructing a cheaper signaling mechanism than by increasing the consumption of education.

[Patricia Shannon]

I knew a divorced lady with two children who went on welfare while she was getting her degree in computer programming. She wouldn't have been able to get her degree while working, and still give her children the attention they needed. After getting her degree, she got a job in programming. And she was a role model for her children for the value of getting an education, and the importance of taking care of our children.

[clintonian]

"then I would think it would be possible to establish that directly"

I agree. The economic study of poverty has been a priority in the USA. In particular, minimum wage moms formerly on welfare were surely bombarded with socio-economic surveys.

[joke]

Both alternatives suck: poor uneducated welfare mother and poor undereducated mother working a crap job for peanuts.

"The trade-off is a classic example of the choice of short-term gain and long-term pain."

This is a joke.

Work vs. education is an irrelevant distinction. Either way, the result is short-term poverty and long-term poverty.

[Patricia Shannon]

joke, why do you say education does not help people get a better paying job at this point in time? Granted, it is not a guarantee even now, and if everybody is educated, education would lose much/most/all of its value to lift people to a better financial position, but that is not the case now.

[joke]

Because we are not talking about a college education, and we are not talking about training for a career or even a good job. Jobs available to high-school educated workers are lousy and do not pay well, and those workers and their dependents remain poor.

Your friend is an exception, unfortunately. I agree with you that a good education is extremely valuable in every sense of the word valuable.

However, a high school education is not adequate. The difference between a welfare mother and a high-school educated mother working a crap job is meaningless, because neither mother gets enough money and they are poor.

[Patricia Shannon]

By contrast, the reforms aimed at adult women, which promoted work and not training, made education less attractive. The authors found the reforms decreased the probability of adult women attending high school or college by 20 to 25%.

I don't know what other people were thinking, but I was talking about welfare enabling women to go to college.

And I think the minimum wage should be much higher, including that for tipped employees, where it remains at $2.13/hour, not being increased the last couple of times the regular minimum wage was raised.

http://www.dol.gov/esa/whd/state/tipped.htm

[joke]

Be realistic. Women on welfare are not going to go to college. By all means, provide free tuition for women on welfare, but be realistic when anticipating results.

median annual salary:
$12,000 Women high school dropouts
$16,000 Women high school education

[Acton.]

I'm confused. if welfare reform discourages single mothers from getting an education, does that mean that welfare pre-1996 was effectively training and educating the women on welfare rolls?

[calmo]

ninja, if you could use the html tags (i,b, strike, blockquote...maybe more) I wouldn't have to make unnecessary trips to the kitchen to wipe my screen of bug spots, you know?.
Interesting. (So glad your post is not random, but your's is testing me with this word. Especially the period. You betcha.) But it begs the question: is more education a good thing? (See? I knew it was going to pay off: what appeared to be innocent bug spots were germs of intelligence...radiating into the screens circuitry and zonking any viewer within miles.)

It's not obvious whether education *increases* human capital, or merely *signals* existing high human capital. (See? bug spot signals) If it is the latter, then there is little value in further education for people on (or off)(or in, or around, or anywhere near (..I B such a master of prepositions...the bug spots love me)) welfare. We would be better served by constructing a cheaper signaling mechanism than by increasing the consumption of education.
I B spellbound now waiting for the next bug spots, you?
Handiwipes no mo.

[Patricia Shannon]

joke says...

Be realistic. Women on welfare are not going to go to college. By all means, provide free tuition for women on welfare, but be realistic when anticipating results.

median annual salary:
$12,000 Women high school dropouts
$16,000 Women high school education

Yes, $16,000 isn't enough for a decent life, and needs to be much more. But it is enough larger than $12,000 to make a difference. I know, I've been there.

says...

I love being on welfare (unemployment). I study hard. Sociology. At the bar every night. Sometimes, but not often, I buy some free drinks to pay back the people. After all, I'm on welfare.

The days were tough though. Only so much TV and hanging out at the pool to do.

[calmo]

But we are somewhat glad you could spend a few moments with us anony:

The days were tough though. Only so much TV and hanging out at the pool to do.

And who knows, you are only a click away from Wiki on this score and ...brace yourself: self-discovery.
Post again with a real tag and let us know how the cluing-in is goin for you.

[Richard H. Serlin]

I've long said that Schoolfare would be much better than Workfare or Welfare, unless someone has a severe mental and/or physical handicap which would make it unreasonable.

This is a fantastic investment, and you could provide very strong incentives to increase one's skills and education, like if the person is not making an effort he loses a large percentage of the benefits, and if this continues he loses all of the benefits -- but can get another chance after some period.

The Schoolfare would be customized to fit the individual by a counselor. Someone with a highschool diploma would be required to attend college, or community college, or a trade school. Someone without a highschool diploma would be required to work towards one. Someone who couldn't read would be required to enter a reading program, etc.

I was going to write a post on this, but you beat me to the punch. In today's world, Schoolfare is far more productive than Workfare.

[Richard H. Serlin]

I'd like to add on Schoolfare, that it's not just the "teach a man to fish thing", which is extremely true and extremely valuable, it's also the effects on others, the externalities. When a child sees his parents, or parent, just collecting welfare, or collecting workfare and picking up trash, that doesn't have nearly the positive effect of seeing his parent studying and going to classes.

Schoolfare not only makes the parent more educated, productive, and self sufficient, it also makes it much more likely that the children will be educated, productive, and self sufficient.

In addition, what if we voted out enough Republicans, and discredited their ideas enough, that we could spend the money on a really large Schoolfare program. The program would have stiff penalties for not making an effort, but if participants did the studying, their classes would be paid for, and they would be given enough to live on while they were advancing their educations and skills. What if we actually made the investment in this very high return program?

Not only would the children of these schoolfare recipients be far more like to become educated and productive, their neighbors would too. Could you imagine how it would change an underclass neighborhood if suddenly half the people on the block were in Schoolfare, taking classes and studying. Could you imagine how that would change the culture of the neighborhood.

Schoolfare could really do a lot to break the cycle of the underclass. It's an expensive investment, but a tremendously high return investment, so it's expense should be welcomed -- the more you invest in high return projects, the richer you become over the long run.

For those who have studied it in finance, why is NPV the rule you should choose and not IRR when deciding between mutually exclusive projects? Because NPV takes into account how big a project is, how much you can milk a high return rate for. If the rate of return is high, you welcome the project being bigger -- you get to milk that high rate of return for more money, and the smart thing is to milk it for as much as possible.

[Patricia Shannon]

Richard H. Serlin
That's a great idea. And it would be good to be able to try again after a person has had time to do some maturing, and discover by experience the value of getting an education.