ABSTRACT
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 changed the U.S. welfare system dramatically.lts primary goal was to reduce dependency by moving most ofthose receiving cash welfare into the work force. One tool to accomplish this objective was a change in the incentives facing actual and potential recipients. States were granted flexibility in how to accomplish this objective. This chapter evaluates the program in one state, Wisconsin, in terms of efficiency and equity. It looks briefly at resulting labor force participation and incomes of those most directly affected by welfare reforms. The analysis highlights the difficulty of simultaneously providing incentives to work and incentives to increase individuals' labor market productivity while maintaining a minimal safety net and avoiding high marginal rates oftaxation. The need to coordinate the benefit and withdrawal schedule of programs designed to help this population flows from the analysis.
