As federal and state officials consider the reauthorization of the block grants at the center of the 1996 federal welfare reform law, it is critical that they use findings from research regarding the impact of welfare reform to guide their decisions. This special report examines the impact of welfare reform on children and youth, drawing on studies using two sources of information: indicator data and experimental studies. Evidence from indicators suggests that family economic circumstances have improved, as shown by a decreased child poverty rate, reduced welfare caseloads, and an increased rate of single mothers in the workforce. Although there were decreases in the nonmarital birth rate and rates of teen childbearing, it was not clear that welfare reform was the impetus for these changes. There were only modest improvements in the percent of children in very good or excellent health in the 1990s and no change in reading scores during the decade. Further, low-income children continued to lag behind other children on outcome measures, with little evidence that they are beginning to catch up. Eight experimental studies of welfare-to-work programs found both favorable and unfavorable effects on children. When welfare-to-work programs resulted in increased maternal employment and increased family income, children fared better on several well-being measures. However, when mothers failed to get or keep a job and raise family income, children's development was jeopardized. Unfavorable effects were also found among adolescents whose parents were moving from welfare to work. Implications for policy are presented. (Contains 13 endnotes.) (KB)