Using data from the Panel Study of Income Dynamics, this paper evaluates the association between welfare policies implemented by states in the early to mid-1990s and the rate at which female household heads with children exit AFDC for work or for non-work reasons. The results show that waiver policies requiring work, such as the work requirement and the elimination of exemptions for mothers of very young children, are associated with more rapid exits through employment. Sanctions for failure to comply are also associated with work exits. Incentive policies that make work more attractive by allowing mothers to remain eligible as earnings rise extend the period of welfare receipt. Neither time limits nor the family cap were related to welfare exits during this early period of welfare reform. The results suggest that other policies implemented in the 1993-1996 period, such as the EITC, influenced welfare exits. While the effects of the economy were significant, they were rather small; relatively high unemployment rates did not deter recipients from working.