Do State-Customized TANF Work Policies Actually Reduce Unemployment?

Objectives. This study seeks to test the impact of states’ worker supplement programs on the unemployment rates of low-income females. Worker supplement programs were implemented to cover more needy people and to meet tougher work requirements in response to the enactment of Deficit Reduction Act of 2005. Methods. We utilize a difference-in-differences method using panel data for 50 states over a nine-year period (2005–2013). Results. Our empirical analysis shows that states implementing worker supplement programs achieve lower unemployment among low-income females compared with states that did not implement the programs. We also find that states with higher total taxable resources per capita have a negative association with unemployment rates of low-income females, while a longer duration of a state’s unemployment insurance program is positively related to the unemployment status of low-income females. Conclusions. States can effectively reduce the unemployment of low-income females by reallocating Temporary Assistance for Needy Families and/or Maintenance of Effort funds and investing in worker supplement programs.