1 After welfare reform and an economic boom: why is child poverty still so much higher in the U.S. than in Europe?

Economic conditions in the United States in 1999 (the latest year for which data on poverty are currently available) were excellent. Inflation and unemployment were low (2.2 and 4.2 per cent, respectively), and the budget was in surplus (about 2 per cent of GDP). In addition, by 1999, the welfare reform of 1996 had transformed the social safety net, requiring work as a condition of cash assistance, even for single mothers with very young children, and limiting the number of years of eligibility for benefits. Favorable economic conditions led employers to increase labour demand and welfare reform mandated increased labour supply. As a result, the labour force participation rate of single mothers increased and the welfare caseload decreased substantially over just a few years.