The Impact of Welfare Reform
on Immigrant Welfare Use

By George J. Borjas

Center Report
March 2002

Abstract

This paper examines the impact of the 1996 welfare reform legislation on welfare use in immigrant households. Although the data indicate that the welfare participation rate of immigrants declined relative to that of natives at the national level, this national trend is entirely attributable to the trends in welfare participation in California. Immigrants living in California experienced a precipitous drop in their welfare participation rate (relative to natives). Immigrants living outside California experienced roughly the same decline in participation rates as natives. The potential impact of welfare reform on immigrants residing outside California was neutralized because many state governments responded to the federal legislation by offering state-funded programs to their immigrant populations and because the immigrants themselves responded by becoming naturalized citizens. The very steep decline of immigrant welfare participation in California is harder to explain, but could be a by-product of the changed political and social environment following the enactment of Proposition 187.

Executive Summary

 From a historical perspective, the limitations on immigrant welfare use included in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) are but the latest in a long line of restrictions, dating back to Colonial days, designed to minimize the costs imposed by the potential immigration of public charges. The first federal restrictions were enacted in 1882, when Congress banned the entry of any persons unable to take care of himself or herself without becoming a public charge, and expanded in 1903 to allow the deportation of immigrants who became public charges within two years after arrival in the United States for causes existing prior to their landing.

Despite the growth of the welfare state and the increasing use of welfare by immigrants, the public charge provisions of immigration law rarely were used in the past few decades. Congress instead chose PRWORA as the vehicle through which to reduce immigrant use of public assistance programs. In general terms, the legislation, as signed by President Clinton, contained two key provisions:

  1. Most non-citizens who arrived in the country before August 22, 1996 were to be kicked off of the SSI and food stamp rolls within a year. (This provision of the legislation, however, was never fully enforced).
     

  2. Immigrants who entered the United States after August 22, 1996 are prohibited from receiving most types of public assistance. The ban is lifted when the immigrant becomes an American citizen.

By setting up a five-year waiting period before newly arrived immigrants qualify for many types of assistance, the welfare reform legislation presumably further discourages the immigration of potential public charges. And by tightening the eligibility requirements for immigrants already living in the United States, the legislation presumably increases the incentives for potential public charges to return to their home countries.

This report provides a detailed examination of the impact of PRWORA on welfare participation in immigrant households. The analysis yielded four major findings:

  1. Even though immigrant participation in welfare programs relative to that of natives declined at the national level, the national trend can be entirely accounted for by what was happening in the state of California. In particular, the relative participation rate of immigrants dropped precipitously in California, but remained roughly constant in the rest of the country.
     

  2. Much of the potential impact of PRWORA on welfare use by immigrants residing outside California was undone by the actions of state governments. Some states — and particularly those states where immigrants reside — chose to offer state-provided benefits to the immigrants adversely affected by welfare reform.
     

  3. It seems that immigrants quickly learned that the naturalization certificate held the key to many types of public assistance denied to non-citizens. The national origin groups most likely to receive public assistance in the pre-PRWORA period experienced the largest increases in naturalization rates after 1996. This response by immigrants served to further neutralize the potential impact of PRWORA on immigrant welfare use.
     

  4. There do not seem to be any factors that can explain the precipitous drop in immigrant welfare participation in California. The California experience may indeed reflect a chilling effect but the chilling effect has nothing to do with welfare reform, and may have much to do with the enactment of Proposition 187.

This evidence has a number of potentially important policy implications, as the reauthorization debate of the welfare reform legislation gets under way. One major problem with PRWORA is its explicit link between the receipt of welfare benefits and the immigrant's naturalization status. Many immigrants will become citizens not because they want to fully participate in the U.S. political system, but because naturalization is a hurdle on the road to receiving welfare benefits. It does not constitute good social policy to equate a naturalization certificate with welfare receipt.

Further, Congress granted individual states the option to supplement federal benefits available to immigrants. Most of the states with large immigrant populations extended the state-funded safety nets to immigrant households. The possibility that the immigrants themselves influenced the political decisions in these states is worrisome, and raises doubts about the wisdom of letting states enhance the benefits available to immigrants. Since 1876, immigration policy has been the sole purview of the federal government. By allowing states to offer generous safety nets to immigrants, some states could easily become magnets for immigration. The states' actions, though sensible from the narrow perspective of local politicians running for elected office, may not be sensible from a national perspective.

In the end, it is probably easier and cheaper to address the problem raised by the immigration of public charges not by ending welfare as we know it, but by reforming immigration policy instead.

Read the report

George J. Borjas is the Pforzheimer Professor of Public Policy at the Kennedy School of Government, Harvard University; and Research Associate at the National Bureau of Economic Research. He is grateful for the financial support provided by the Estrada Fellowship in Immigration Studies, awarded by the Center for Immigration Studies.