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Journal Issue: Immigrant Children Volume 21 Number 1 Spring 2011

Poverty and Program Participation among Immigrant Children
George J. Borjas

Welfare Reform and Poverty

The data summarized in the previous section suggest different trends in public assistance program participation rates between immigrant children and other groups of children immediately after 1996. In particular, program participation of immigrant children, particularly of those born abroad, declined at a faster rate in the last half of the 1990s. These differential trends between immigrants and natives are typically attributed to the enactment in 1996 of PRWORA, which set newly restrictive rules for determining the eligibility of foreign-born persons for practically all types of public assistance. In rough terms, PRWORA denies most types of federal means-tested assistance (such as TANF and Medicaid) to noncitizens who arrived after the legislation was signed and limits the eligibility of many noncitizens already living in the United States.

The legislation, however, gave states the option to offer TANF and Medicaid to some of these immigrants through state-funded programs, and some states opted to do so in the years immediately after the law was enacted. These state choices, designed to offset the federal cutbacks, obviously increase the degree of dispersion in "welfare opportunities" available to immigrants living in different states.

The Urban Institute has constructed an index of "welfare generosity" that classifies states into four categories according to the availability of the state-funded safety net.17 The states where such aid was "most available" included California and Illinois; the states where the aid was "somewhat available" included New York and Florida; the states where the aid was "less available" included Arizona and Michigan; and the states were the aid was "least available" included Ohio and Texas. Many of the states that chose to offer above-average levels of state-funded assistance to immigrants in the aftermath of the PRWORA cutbacks were those with the largest immigrant populations.

Table 2 summarizes the results of a regression analysis designed to determine whether the poverty rates and program participation rates of immigrant children who lived in a generous state (defined as a state where the state-funded assistance was either "most available" or "somewhat available") differed from those of the immigrant children who lived in the less generous states. By design, the impacts summarized in the table are relative to the changes observed among native children, so that they net out any state-specific factors that might affect the pre- and post-1996 trends.18 Note that the table also reports the impact of PRWORA both in the short run (immediately after enactment, in 1997–2000) and in the long run (2001–09).

The data reveal that the state-level provisions of PRWORA significantly increased the fraction of immigrant children who receive public assistance in the more generous states, both in the short and in the long run. This increase, however, is evident only when the measure of program participation includes Medicaid. Hence it seems that states were able to attenuate the impact of the federal cutbacks through the provision of health services (either through the Medicaid program itself or the expansion of SCHIP to immigrant children). The impact of living in a "generous" state is numerically important. In particular, residing in a generous state permanently increased the program participation rate of U.S.-born immigrant children by about 2.8 percentage points and that of foreign-born immigrant children by about 7.0 percentage points above the rates for the two groups of immigrant children residing in the less generous states—even after netting out any state differences that would be reflected in the program participation rate of native children. The results are quite different for children of mixed parentage, however; the state-level provisions of PRWORA had no such impact on their program eligibility, and thus their participation rate did not change significantly.

Table 2 also summarizes the impact of the state-funding provisions in PRWORA on the poverty rate of the various groups of children. The evidence is striking. By providing additional assistance to immigrant children, especially through the Medicaid-SCHIP programs, the generous states were able to reduce the poverty rate of immigrant children, regardless of where they were born, by about 3.5 percentage points in the long run. It is unclear why the additional assistance provided through the Medicaid-SCHIP program reduced poverty rates, particularly since participation in these programs does not enter the calculation of the poverty threshold. Nevertheless, the additional resources provided to immigrant children are correlated with a significant improvement in the economic status of the immigrant families.