Welfare and Food Assistance at the State and Sub-State Level: A Framework for Evaluating Economic and Programmatic Changes

Welfare and food stamp program changes may affect local economies, and economic changes may affect local program participation. In this paper we outline a model of these interactions. First we highlight key changes in the programs and report recent program and labor market participation patterns in metro and non-metro portions of the Midwest and the state of Iowa. Then we describe computable general equilibrium (CGE) model equations that formalize the types of choices being made and discuss the regional economic impacts that can be simulated. In the process, we raise several related research questions. The goal of welfare reform is to decrease household dependency on transfer payments from government. States have been encouraged to tailor programs to their own circumstances two ways: by waivers (prior to 1996) and by the conversion of the previously “need-based” intergovernmental transfers to blocked grants (since 1996). Waivers gave states the authority to administer their own programs, and blocking means they must do so with a limited budget. The requisite for federal funding under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 is that states require able-bodied welfare recipients to make the transition from welfare to work or risk losing benefits. It is also the first act since the original Social Security Act of 1935 to impose a time limit on dependency. Ideally, the reform