How “Safe” Is the Safety Net? Examining the Design and the Effects of Income Support Policy

This dissertation examines the design and the effect of income support policies on employment outcomes for socio-economically disadvantaged clients. Specifically, I examine Temporary Assistance for Needy families (TANF) and the Earned Income Tax Credit (EITC), bringing together the literature from Public Administration and Economics to assess these policies from 1996 to 2013. Using quantitative econometric analysis that uses large datasets comprised of data from the Census Bureau, the Urban Institute, University of Kentucky Center for Poverty Research and the Bureau of Labor Statistics, I find that some features of work based safety net (refundable EITC, some earned income disregard policies, human capital development assistance) are associated with positive employment outcomes. In essay 1, I focus on the relationship between Second Order Devolution (SOD) and administrative exclusion and find that for clients up to 150 percent of the Federal Poverty Level and for single mothers, living in an SOD state increases the likelihood of an administrative exit. Following essay 1, I then examine the interaction between financial incentives embedded in TANF and EITC in essay 2 and find mixed results where some combinations of financial incentives within the state EITC and TANF programs seem to lead to better employment outcomes than other combinations. Finally, essay 3 takes a closer look at job search programs under TANF, indicating that participation in human capital development treatments such as skills training increases employment likelihoods for socioeconomically disadvantaged individuals. The results of this dissertation indicate that though some of these program features appear to be working for socioeconomically disadvantaged populations, still complex program rules, bureaucratic structures may limit clients’ access to welfare programs. Simplifying program rules under TANF, providing better performance measure for federal assessment of state TANF programs, more states adopting refundable EITC program, providing skills and training opportunities for clients could lead to better employment outcomes for at-risk populations.