The Personal Responsibility and Work Opportunity Reconciliation
Act (PRWORA), signed into law in 1996, transformed the U.S. welfare
system. PRWORA replaced the Aid to Families with Dependent Children
(AFDC) program with Temporary Assistance for Needy Families (TANF).
Since its inception in 1935 as part of the Social Security Act, AFDC had
been the main welfare program providing assistance to low-income single
mothers. But a number of factors, particularly the rapid growth in the
never-married single-mother population and a resumption of growth in
caseloads in the early 1990s (following the surge of the late 1960s and
early 1970s; figure 1), rendered the program unpopular.1 Under the new
TANF program, welfare participation among single mothers has dropped
dramatically, from 25 percent in 1996 to 9 percent today. At the same time, the fraction of single mothers who work has increased from 74 percent
in 1996 to 79 percent today. The goal of this paper is to ascertain what features
of welfare reform, if any, have been most responsible for this decline
in welfare participation and increase in work among single mothers.