The Personal Responsibility and Work Opportunity and Reconciliation Act: Spending and Poverty

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) is the latest implementation of the welfare program. Different from Aid to Families with Dependent Children, the new law allows for spending in categories other than the cash assistance traditionally thought of as welfare. With the new program being administered as a block grant to the states, the levels of spending in each category vary not only by year but also by state. In this paper, I summarize PRWORA spending into seven categories. I will test for a correlation between levels of spending on benefits and other categories and changes in the official poverty measure. At the end, I find that spending on childcare assistance, work supports, and tax credits authorized under PRWORA have a moderate effect on a state's poverty rate in the short-term.