Citation
Gennetian, L., Miller, C., & Smith, J. (2005). Turning welfare into a work support: Six-year impacts on parents and children from the Minnesota Family Investment Program. Washington, DC: Office of Planning, Research and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services.
Highlights
- The study’s objective was to examine the impact of the Minnesota Family Investment Program (MFIP), a precursor to the national Temporary Assistance for Needy Families program, on employment, earnings, and public benefit receipt.
- The study was a randomized controlled trial: Families newly applying to Aid to Families with Dependent Children (AFDC) or families that were recertifying their eligibility were randomly assigned to MFIP or AFDC. Evaluators analyzed outcomes using a 36-month follow-up survey and administrative data from the six years after the intervention.
- The study found that, among single parents in the year after MFIP began, the MFIP group experienced higher rates of short-term employment and higher rates and levels of cash assistance than the AFDC group. For two-parent households, the study found that, in the first year after the study began, the MFIP group had lower rates of employment, lower levels of earnings, and higher rates and levels of benefits receipt than the AFDC group. In both family types, higher receipt of cash assistance for the MFIP group persisted through six years after the study began.
- The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to MFIP, and not to other factors.
Intervention Examined
The Minnesota Family Investment Program (MFIP)
Features of the Intervention
MFIP, implemented in 1994 and a precursor to the national Temporary Assistance for Needy Families program, used several strategies to encourage work among AFDC clients. First, the MFIP benefit calculation incentivized work by increasing the basic AFDC grant by 20 percent if clients worked and by reducing benefits by only 62 percent for every earned dollar (rather than a dollar-for-dollar reduction). These financial incentives remained in effect as long as clients remained on MFIP. Second, long-term welfare recipients (two-parent families that had received AFDC for more than 6 of the past 12 months) were required to participate in employment and training activities unless they met certain exemption criteria. Exemption criteria included working at least 30 hours per week, having a child younger than age one, or meeting good cause criteria. Recent AFDC applicants assigned to MFIP could also volunteer to participate in these activities. Employment and training activities emphasized quicker entry into the workforce and combining education and training with work. People who did not participate in employment and training activities could see their benefits reduced by 10 percent. Third, MFIP combined families’ AFDC, Food Stamps, and Family General Assistance, a state-funded cash assistance program, into a single program with one monthly payment; in addition, Food Stamp benefits were provided in cash, rather than as coupons. Finally, MFIP paid child care costs directly to providers rather than having parents pay out of pocket and receive reimbursement.
Features of the Study
The study was a randomized controlled trial: 10,908 families newly applying to AFDC or recertifying their eligibility were randomly assigned to two groups: MFIP or AFDC. The two groups’ outcomes, measured using a 36-month follow-up survey and administrative data collected six years after randomization and adjusted for demographic characteristics, were compared. Researchers analyzed results for single- and two-parent families separately.
Findings
- For single-parent families, the study found that MFIP increased employment and cash assistance receipt by statistically significant amounts. The quarterly employment rate in the first follow-up year was 49.0 percent for the MFIP group compared with 42.2 percent for the AFDC group; the quarterly rate of receipt of cash assistance in the first follow-up year was 82.3 percent for the MFIP group compared with 76.6 percent for the AFDC group; and the quarterly mean dollar amount of AFDC cash benefits received in the first follow-up year was $1,589 for the MFIP group compared with $1,359 for the AFDC group.
- For two-parent households, the study found that participation in MFIP decreased employment and increased cash assistance receipt. In terms of employment and earnings, the quarterly rate of households with both parents employed in the first follow-up year was 22.3 percent for the MFIP group compared with 27.0 percent for the AFDC group and the mean household quarterly earnings were $2,320 for the MFIP group compared with $2,691 for the AFDC group. In the first follow-up year, the quarterly cash assistance benefit receipt rate was 76.4 percent for the MFIP group compared with 67.5 percent for the AFDC group and the mean quarterly amount of welfare benefits received was $1,815 for the MFIP group compared with $1,312 for the AFDC group.
- This trend of increased public assistance in the treatment group persisted to the sixth follow-up year. In that year, for single parents, the mean quarterly amount of welfare benefits received was $416 for the MFIP group compared with $382 for the AFDC group. For two-parent families in year six, the quarterly cash assistance benefit receipt was 26.3 percent for the MFIP group compared with 22.3 percent for the AFDC group and the mean quarterly amount of welfare benefits received was $465 for the MFIP group compared with $394 for the AFDC group.
Considerations for Interpreting the Findings
MFIP’s impacts for single- and two-parent families differed somewhat. Although single-parent households participating in MFIP experienced increases in both work and benefits receipt, two-parent families experienced lower rates of two-parent employment along with higher levels of benefits receipt. This could be the result of the program design for two-parent families: in two-parent families, only one MFIP parent was subject to the work requirement, so mothers in these families often did not work and offset the decrease in earned income with income from cash assistance.
Causal Evidence Rating
The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to MFIP, and not to other factors.