Hostname: page-component-669899f699-7tmb6 Total loading time: 0 Render date: 2025-04-25T19:16:33.066Z Has data issue: false hasContentIssue false
  • English
  • Français

Does the allocation of TANF funds to state EITC programs in the U.S. increase changes in the poverty gap amongst TANF recipients?

Published online by Cambridge University Press:  15 April 2025

Na Yeon Kim Open the ORCID record for Na Yeon Kim [Opens in a new window]
Na Yeon Kim*
Affiliation:
Department of Public Administration, Kookmin University, Seoul, Korea
*
Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The increasing use of Temporary Assistance for Needy Families (TANF) funds for state Earned Income Tax Credit (EITC) programs in the United States (U.S.) has raised concerns about the diversion of TANF funds for purposes not directly aligned with TANF’s core objectives. This study investigates whether states’ allocation of TANF funds to state EITC programs reduces the overall income of both current and former TANF recipients and potentially widens changes in the poverty gap. Changes in the poverty gap are calculated by subtracting the poverty gap at time t−1 from that at time t, where the poverty gap is defined as the difference between 50 percent of the state median income of households with children and the average income of TANF recipients. This study employs panel data from all fifty states spanning 2008–2016 and utilises fixed-effects estimation. Empirical findings suggest that states’ utilisation of TANF funds to support state EITC programs does not have a statistically significant effect on changes in the poverty gap for TANF recipients. This study proposes that TANF fund diversion may reflect states’ efforts to pursue poverty reduction, particularly given the inconclusive evidence regarding TANF’s anti-poverty impact.

Keywords

Temporary Assistance for Needy Families (TANF)TANF block grantfederal fund diversionstate earned income tax creditpoverty gap
Type
Article
Information
Journal of Social Policy , First View , pp. 1 - 23
Copyright
© The Author(s), 2025. Published by Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

Acs, G., & Loprest, P. (2007). TANF caseload composition and leavers synthesis (Report Contract No. 233-02-0092). https://www.urban.org/sites/default/files/publication/46751/411553-TANF-Caseload-Composition-and-Leavers-Synthesis-Report.PDF Google Scholar
Agéno, P. (2004). Unemployment-poverty trade-offs (Policy Research Working Papers, No. 3297). https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-3297 Google Scholar
Anderson, S., Halter, A., & Gryzlak, B. (2004). Difficulties after leaving TANF: inner-city women talk about reasons for returning to welfare. Social Work, 49(2), 185–194.CrossRefGoogle ScholarPubMed
Ayala, L., Cantó, O., & Rodríguez, J. G. (2017). Poverty and the business cycle: a regional panel data analysis for Spain using alternative measures of unemployment. The Journal of Economic Inequality, 15, 47–73.CrossRefGoogle Scholar
Azevedo-McCaffrey, D., & Safawi, A. (2022). To promote equity, states should invest more TANF dollars in basic assistance. https://www.cbpp.org/sites/default/files/1-5-17tanf-rev1-12-22_0.pdf Google Scholar
Bendick, M. Jr. (1980). Failure to enroll in public assistance programs. Social Work, 25(4), 268–274.Google Scholar
Berry, W. D., Fording, R. C., Ringquist, E. J., Hanson, R. L., & Klarner, C. E. (2010). Measuring citizen and government ideology in the U.S. states: a re-appraisal. State Politics & Policy Quarterly, 10(2), 117–135.CrossRefGoogle Scholar
Beverly, S. G. (2002). What social workers need to know about the earned income tax credit. Social Work, 47(3), 259–266.CrossRefGoogle ScholarPubMed
Blank, R. M. (2001). What causes public assistance caseloads to grow? Journal of Human Resources, 36(1), 85–118.CrossRefGoogle Scholar
Blank, R. M. (2002). Evaluating welfare reform in the United States. Journal of Economic Literature, 40(4), 1105–1166.CrossRefGoogle Scholar
Blank, R. M., & Blinder, A. S. (1985). Macroeconomics, income distribution, and poverty (Working Paper No. 1567). https://www.nber.org/system/files/working_papers/w1567/w1567.pdf Google Scholar
Brady, D., Finnigan, R. M., & Hübgen, S. (2017). Rethinking the risks of poverty: a framework for analyzing prevalences and penalties. American Journal of Sociology, 123(3), 740–786.CrossRefGoogle Scholar
Brauner, S., & Loprest, P. (1999). Where are they now? What states’ studies of people who left welfare tell us (Series A, No. A-32). https://eric.ed.gov/?id=ED439167.Google Scholar
Cancian, M., Haveman, R. H., Meyer, D. R., & Wolfe, B. (2002). Before and after TANF: the economic well-being of women leaving welfare. Social Service Review, 76(4), 603–641.CrossRefGoogle Scholar
Cancian, M., & Meyer, D. R. (2000). Work after welfare: women’s work effort, occupation, and economic well-being. Social Work Research, 24(2), 69–86.CrossRefGoogle Scholar
Center on Budget and Policy Priorities. (2022). Temporary assistance for needy families. https://www.cbpp.org/sites/default/files/atoms/files/7-22-10tanf2.pdf Google Scholar
Cheng, T. (2010). Financial self-sufficiency or return to welfare? A longitudinal study of mothers among the working poor. International Journal of Social Welfare, 19(2), 162–172.CrossRefGoogle Scholar
Eamon, M. K., Wu, C. F., & Zhang, S. (2009). Effectiveness and limitations of the earned income tax credit for reducing child poverty in the United States. Children and Youth Services Review, 31(8), 919–926.CrossRefGoogle Scholar
Eissa, N., & Hoynes, H. W. (1998). The earned income tax credit and the labor supply of married couples (No. w6856).CrossRefGoogle Scholar
Eissa, N., & Hoynes, H. W. (2004). Taxes and the labor market participation of married couples: the earned income tax credit. Journal of public Economics, 88(9–10), 1931–1958.CrossRefGoogle Scholar
Eissa, N., & Liebman, J. B. (1996). Labor supply response to the earned income tax credit. The Quarterly Journal of Economics, 111(2), 605–637.CrossRefGoogle Scholar
Eriksen, A., & Molander, A. (2019). Welfare reform and public justification. Policy Studies, 40(6), 628–647.CrossRefGoogle Scholar
Falk, G. (2023). Temporary Assistance for Needy Families: The Decline in Assistance Receipt Among Eligible Individuals (R47503). Retrieved from https://crsreports.congress.gov/product/pdf/R/R47503 Google Scholar
Gornick, J. C., & Jäntti, M. (2012). Child poverty in cross-national perspective: lessons from the Luxembourg Income Study. Children and Youth Services Review, 34(3), 558–568.CrossRefGoogle Scholar
Grogger, J. (2003). The effects of time limits, the EITC, and other policy changes on welfare use, work, and income among female-headed families. Review of Economics and Statistics, 85(2), 394–408.CrossRefGoogle Scholar
Gruber, J. (2000). Cash welfare as a consumption smoothing mechanism for divorced mothers. Journal of Public Economics, 75(2), 157–182.CrossRefGoogle Scholar
Gundersen, C., & Ziliak, J. (2004). Poverty and macroeconomic performance across space, race, and family structure. Demography, 41(1), 61–86.CrossRefGoogle ScholarPubMed
Haskins, R. (2001). Effects of welfare reform on family income and poverty. In Blank, R. M., & Haskins, R. (Eds.), The new world of welfare (pp. 103–136). Washington, DC: Brookings Institution Press.Google Scholar
Hoynes, H. W., Page, M. E., & Stevens, A. H. (2006). Poverty in America: trends and explanations. Journal of Economic Perspectives, 20(1), 47–68.CrossRefGoogle Scholar
Hoynes, H. W., & Patel, A. J. (2018). Effective policy for reducing poverty and inequality? The Earned Income Tax Credit and the distribution of income. Journal of Human Resources, 53(4), 859–890.CrossRefGoogle Scholar
Jacobsen, K., & McGuire, T. G. (1996). Federal block grants and state spending: the alcohol, drug abuse, and mental health block grant and state agency behavior. Journal of Health Politics, Policy and Law, 21(4), 751–768.CrossRefGoogle ScholarPubMed
Kim, M., & Mergoupis, T. (1997). The working poor and welfare recipiency: participation, evidence, and policy directions. Journal of Economic Issues, 31(3), 707–728.CrossRefGoogle Scholar
Kim, R. (2001). The effects of the Earned Income Tax Credit on children’s income and poverty: who fares better? Journal of Poverty, 5(1), 1–22.CrossRefGoogle Scholar
Martin, I. W., & Prasad, M. (2014). Taxes and fiscal sociology. Annual Review of Sociology, 40(1), 331–345.CrossRefGoogle Scholar
Mendenhall, A. N. (2006). A guide to the earned income tax credit: what everyone should know about the EITC. Journal of Poverty, 10(3), 51–68.CrossRefGoogle Scholar
Meyer, B. D., & Rosenbaum, D. T. (2001). Welfare, the earned income tax credit, and the labor supply of single mothers. The Quarterly Journal of Economics, 116(3), 1063–1114.CrossRefGoogle Scholar
Meyer, B. D., & Sullivan, J. (2004). The effects of welfare and tax reform: the material well-being of single mothers in the 1980s and 1990s. Journal of Public Economics, 88(7–8), 1387–1420.CrossRefGoogle Scholar
Meyers, M. K., & Lee, J. M. (2003). Working but poor: how are families faring? Children and Youth Services Review, 25(3), 177–201.CrossRefGoogle Scholar
Moffitt, R. A. (1999). The effects of pre-PRWORA waivers on welfare caseloads and female earnings, income and labor force behavior. In Danziger, S. H. (Ed.). Economic conditions and welfare reform (pp. 91–118). Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.CrossRefGoogle Scholar
Neumark, D., & Wascher, W. (2000). Using the EITC to help poor families: new evidence and a comparison with the minimum wage (Working Paper No. 7599). http://www.nber.org/papers/w7599Google Scholar
Ozawa, M. N., & Hong, B. E. (2003). The effects of EITC and children’s allowances on the economic well-being of children. Social Work Research, 27(3), 163–178.CrossRefGoogle Scholar
Parolin, Z. (2019). Temporary assistance for needy families and the Black-White child poverty gap in the United States. Socio-Economic Review, 19(3), 1005–1035.CrossRefGoogle Scholar
Schoeni, R. F., & Blank, R. M. (2000). What has welfare reform accomplished? Impacts on welfare participation, employment, income, poverty, and family structure (No. w7627). https://www.nber.org/papers/w7627 CrossRefGoogle Scholar
Schott, L., Floyd, I., & Burnside, A. (2015). How states use funds under the TANF block grant. https://www.cbpp.org/research/family-income-support/how-states-use-federal-and-state-funds-under-the-tanf-block-grant Google Scholar
Seccombe, K., & Amey, C. (1995). Playing by the rules and losing: health insurance and the working poor. Journal of Health and Social Behavior, 36(2), 168–181.CrossRefGoogle ScholarPubMed
Shrivastava, A. (2023). Policy brief: To strengthen economic security and advance equity, states should invest more TANF dollars in basic assistance. https://www.cbpp.org/research/family-income-support/policy-brief-states-should-invest-more-of-their-tanf-dollars-in-basic Google Scholar
Slack, K. S., Magnuson, K. A., Berger, L. M., Yoo, J., Coley, R. L., Dunifon, R., … Osborne, C. (2007). Family economic well-being following the 1996 welfare reform: trend data from five non-experimental panel studies. Children and Youth Services Review, 29(6), 698–720.CrossRefGoogle ScholarPubMed
Strengthening Temporary Assistance for Needy Families (TANF) as a Safety Net and Work Program, 88 F.R. 67697 (proposed October 2, 2023). https://www.federalregister.gov/documents/2023/10/02/2023-21169/strengthening-temporary-assistance-for-needy-families-tanf-as-a-safety-net-and-work-program Google Scholar
Sykes, J., Križ, K., Edin, K., & Halpern-Meekin, S. (2015). Dignity and dreams: what the Earned Income Tax Credit (EITC) means to low-income families. American Sociological Review, 80(2), 243–267.CrossRefGoogle Scholar
Thompson, G. A., Azevedo-Mccaffrey, D., & Carr, D. (2023a). Policy brief: increases in TANF cash benefit levels are critical to help families meet rising costs. https://www.cbpp.org/research/income-security/increases-in-tanf-cash-benefit-levels-are-critical-to-help-families-meet Google Scholar
Thompson, G. A., Azevedo-Mccaffrey, D., & Carr, D. (2023b). Increase in TANF cash benefit levels are critical to help families meet rising costs. https://www.cbpp.org/research/income-security/increases-in-tanf-cash-benefit-levels-are-critical-to-help-families-meet-0 Google Scholar
Wright, S. (2016). Conceptualising the active welfare subject: welfare reform in discourse, policy and lived experience. Policy & Politics, 44(2), 232–252.CrossRefGoogle Scholar