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Recently Released: Housing Assistance and the Effects of Welfare Reform: Evidence from Connecticut and Minnesota

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Many families that receive housing assistance from the
Department of Housing and Urban Development (HUD) also
receive cash welfare. The Welfare Reform Act of 1996
fundamentally altered that program. How has welfare
reform affected HUD tenants? How have they responded to
the new incentives offered by the different state welfare
departments?

A recent study commissioned by the Office of Policy
Development and Research (PD&R), "Housing Assistance and
the Effects of Welfare Reform: Evidence from Connecticut
and Minnesota," uses data from two welfare reform
experiments to ask the following five questions:

o Are the welfare recipients who receive housing
assistance a harder-to employ group than the recipients
who do not receive housing subsidies?

o Are the welfare reform initiatives any more effective
or less effective for welfare recipients who receive
housing assistance than for those who do not?

o Does the effectiveness of the welfare reform
initiatives vary for recipients who receive different
types of housing subsidies?

o Does welfare reform raise or lower the length of time
spent in assisted housing?

o Is there a statistical relationship between receipt of
housing assistance for welfare recipients and subsequent
success in the labor market?

The researchers used data from experiments in which
thousands of families were randomly assigned either to
the welfare reform program or to the traditional welfare
program that was in place prior to 1996. In such a
controlled experiment, any significant difference in the
outcomes for the two groups can be attributed to the
policy change.

The study yields some compelling results. First, major
differences were not found between HUD-assisted and
unassisted welfare families in terms of prior employment
or educational attainment, as almost 55 percent of both
those with housing assistance and those without had
previously worked for an employer for 6 months or more,
and had received their GED. However, the subgroup with
housing subsidies included a higher proportion of long-
term welfare recipients.

Second, the impacts of welfare reform on employment and
earnings were consistently larger for recipients with
housing assistance than for those without. In
Connecticut, the $3,965 impact on average four-year
earnings for the former was more than twice as big as the
impact for the latter ($1,658). Both the Connecticut and
the Minnesota initiatives produced larger gains in income
for recipients with housing assistance than for
recipients with no housing assistance.

Third, welfare reform modestly reduced the length of stay
in assisted housing.

Non-experimental  analysis found that the combination of
housing assistance and welfare reform is associated with
better employment outcomes than welfare reform alone.

The authors conclude that their findings are largely
consistent with other recent studies showing that welfare
reforms are more effective in improving many self-
sufficiency outcomes for welfare recipients with housing
assistance than for those without it.

"Housing Assistance and the Effects of Welfare Reform:
Evidence from Connecticut and Minnesota" is available on
the Web at
https://www.huduser.gov/portal/publications/pubasst/housingAsst.html
or in printed form for a nominal charge by calling HUD
USER at 1-800-245-2691.
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