Still Echoing: Intergenerational Effects of Welfare Reform on Noncognitive Skill Formation

• In Event: Poverty, Policies, and Program Participation's Relationship to Child and Adolescent Well-being

Abstract

How did welfare reform affect the children who grew up under it? The 1990s overhaul of U.S. cash assistance replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF), introducing work requirements, time limits, sanctions, and greater state discretion. Prior research has examined effects on adults and children's short-run outcomes, but less is known about whether early-life exposure shaped human capital as exposed cohorts entered young adulthood. I study noncognitive skills (NCS), an overlooked socioemotional dimension of human capital, using validated Big Five-based measures of personality. Linking the PSID core survey to the Child Development Supplement and Transition into Adulthood Supplement, I measure exposure from conception through age five and estimate a triple-difference design exploiting variation across states, birth cohorts, and mothers' likelihood of being affected. I find that early-life exposure lowered young-adult NCS by 0.23 standard deviations among individuals born to likely affected mothers, and the effect holds across an extensive battery of robustness checks, including event-study tests of parallel trends, a stacked estimator that addresses staggered adoption, randomization inference, and bounds on unobserved confounding. The decline is concentrated in agreeableness and openness and is most detectable among girls and White children, though subgroup differences are imprecise. Consistent with a critical-period mechanism, the harm is largest for children exposed in the earliest years and fades for those first exposed later in childhood, and mechanism results point less to household income or maternal employment than to disruption of the early caregiving environment. A follow-up augmented Mincer wage framework shows why these developmental costs stay hidden: the labor market rewards the eroded traits weakly, so reform exposure leaves adult earnings and employment unchanged even as the underlying skills decline. The harm is real but non-pecuniary, borne in socioemotional character rather than wages. The findings show that safety-net reforms can leave lasting marks on less visible dimensions of children's human capital that conventional evaluations of education, employment, and earnings may miss.

Author

• Kingsford Onyina, University of North Carolina, Charlotte
  Presenting Author