DO WELFARE BENEFITS CAUSE THE WELFARE CASELOAD

Analyses of the welfare system generally examine one of five competing models: (1) The work disincentive model; (2) the human capital model; (3) the macroeconomic model; (4) the public choice model; or (5) the cost-of-job-loss model. This paper employs the Granger causality conce pt and the multiple-rank F statistic to test the implications of all f ive of these models simultaneously. The results offer modest support t o all but the macroeconomic model. The relationships among welfare ben efits, caseloads, and labor market conditions appear to be too complex to be fully captured by a single model.