Does generous welfare policy encourage dependence? TANF asset limits and duration of program participation

Abstract

ABSTRACT There is increasing evidence that restrictive financial asset limits for eligibility in the Temporary Assistance for Needy Families (TANF) program discourage program participants from building their own financial safety nets and ultimately create disincentives for independence. However, some lawmakers fear that liberalizing these limits will encourage program dependence. The existent research suggests that asset limits do not affect state caseload size, but there is an insufficient understanding of whether these limits influence the rate at which participants move toward financial independence. The researchers compiled data from the Urban Institute's Welfare Rules Database and the Administration for Children and Families to examine the relationship between TANF asset limits and duration of program participation. Findings suggest that high or eliminated asset limits are not associated with long-term assistance. This work supports state and federal advocacy efforts to address the ways in which TANF asset limits restrict opportunities for asset development and long-term financial capability among low-income families.