AbstractRequired work and training, a major component of recent “welfare reform” proposals, is intended to increase the self‐sufficiency of welfare recipients and thereby produce savings for government treasuries as well as more income for the recipients themselves. This analysis focuses explicitly on the budgetary effects of such activities, estimating the cost savings and new revenues generated by welfare employment programs started in four states since 1981. It suggests that when a broad range of effects are taken into account over a sufficiently long period, the overall budgetary implications of the programs are usually positive at the federal, state, and local levels of government. The costs and gains, however, are shared unevenly by the three levels, which encourages disparities in the programs states and localities choose to impl