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Abstract

Using data from the 1969 to 1993 Panel Study of Income Dynamics, this article examines a number of models to determine the characteristics of AFDC recipients who fare well economically after they initially leave the welfare system. The study includes analyses of income levels, time spent employed and not employed, and time spent below the poverty line. Hypotheses regarding state welfare payments, area economic conditions, human capital and time spent receiving welfare are examined. The findings indicate that area employment conditions and the ability to quickly find work greatly affect the likelihood of faring well economically after welfare. We found that time spent receiving welfare had some small negative effects on post-welfare economic outcomes. However, former welfare recipients living in states with more generous welfare payments are as likely to work, to not use welfare, and are generally as well off as those living in states with less generous welfare payments. These results indicate that high welfare benefit levels may not be a disincentive to work. The findings also indicate that women who have little job experience, who lack education, and who have many or more children after AFDC, fare economically worse than others.

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