Association for Public Policy Analysis & Management

High school dropout and youth idleness (i.e., youths neither working nor enrolled in school) are large problems in the United States, particularly in poor communities where 30 percent of youths do not complete high school and nearly 10 percent are neither working nor in school. While Conditional Cash Transfers (CCTs) have been used to shape behaviors of poor youths in many other countries (e.g., Progresa, Bolsa Familia), using such transfers to affect U.S. dropout and idleness has been little studied. In this paper I investigate a previously unexamined dimension of post-1996 welfare policy in the United States: namely, state-level welfare program rules that conditioned receipt of household welfare benefits on school enrollment (or work participation) of any teen household member. To investigate whether these policies reduced idleness of affected youth, I use variation in these policies across states and over time. I find that these policies reduced youth idleness by 1.4 percentage points (17 percent effect relative to a baseline of 0.081) and increased school enrollment by 2.4 percentage points (3 percent effect relative to baseline of 0.866), although I do not find any evidence of impacts on youth employment in the aggregate. Subgroup analyses by race and gender reveal that these impacts are driven by the behavior of black youth and female youth. Overall, the results suggest some promise in using CCTs in the United States as a means to move low-income youths away from idleness and into human-capital enhancing activities.