Ask Mary Patino about the advantages of work over welfare and she offers an upbeat answer.

"My life is much different," says Ms. Patino, a food-service worker at a wholesale club in San Jose, Calif. "When I was on aid, it was stress – worrying about having enough money to pay the rent and give my daughters what they need. Now I have a steady income."

But ask if her children are better off, and she hedges. "On the financial part, yes," she says. "But as a mom, I know they need a lot more attention and time."

As welfare reform has propelled millions of single mothers like Patino into the workforce since 1996, questions about its effects on families have loomed large. Now a report released today offers the first national look at how toddlers and preschoolers have fared under the new system.

The good news is that the demand that welfare recipients find jobs has boosted family income. But the stubborn counterpoint is that the modest economic gains have not discernably improved families' living conditions or the daily lives of young children.

It's a sign that, while the welfare-to-work law has enjoyed bipartisan support and helped cut welfare rolls in half since 1996, lingering questions remain about its effect on children.

In the study, mothers' earnings averaged less than $13,000 a year, keeping most families below the poverty line.

Since government assistance diminishes as their job income rises, some mothers still do not have enough money to pay the rent. One-fifth of all mothers in the study had to cut the size of meals they serve their children because they lack cash to buy more food. Two in every 5 women also reported significant levels of emotional depression.

Researchers followed more than 700 single mothers for up to four years after they entered welfare-to-work programs in California, Florida, and Connecticut. Where other welfare studies have focused on elementary school children and high school students, this is the first comprehensive look at the impact on young children, who are most affected by their mothers' work.

The report, a collaboration by scholars at several universities, comes as the welfare system awaits reauthorization by Congress. President Bush has proposed expanding the hours that welfare recipients must spend in "work activities," which can include job training, to 40 hours per week. Currently, the requirement is 30 hours – or 20 for those with children under five.

The proposal is controversial, touching on a central debate about welfare reform: whether children will be shortchanged by having parents out of the home more often.

Among the report's encouraging findings, the children who attended child-care centers – one-third of those studied – show better literacy skills than those who are cared for in other arrangements. Those enrolled in higher-quality centers made even greater progress.

"We do find a positive effect from child-care centers," says Susanna Loeb of Stanford University, a director of the project. "That's the most exciting part of the study."

Yet she is disappointed that children did not make greater gains in cognitive development.

Researchers see few improvements in parenting practices, such as parents reading to children. Most mothers say they spend less time with their young children because they work.

Although the home environment did not deteriorate when mothers went to work, neither did it improve, researchers found.

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