Are AFDC and SSI Substitutes?

The passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 for the first time placed strict limits on the amount of support families could receive from the Aid to Families with Dependent Children program (AFDC). Generally, researchers and policy makers have both assumed that any substitute support that does arise will be from non-governmental sources – women will either find work, receive support from family members, or be aided by local religious organizations or other private charities. We investigate the potential for one government program, the Social Security Insurance (SSI) program, to simply substitute for the reductions in the AFDC program. We find strong evidence that AFDC and SSI are substitutes. This suggests that at least part of the effect of welfare reform will be to shift the burden of support for poor families from one government program to another rather than from governmental to non-governmental sources.