The Effects of Single Mothers' Welfare Participation and Work Decisions on Children's Attainments

Ozturk, Orgul and Chyi, hau (2006): The Effects of Single Mothers' Welfare Participation and Work Decisions on Children's Attainments.

Abstract

This research examines the effects of mothers' welfare and work decisions on their children's attainments using a random effect instrumental variables (REIV) estimator. The estimator employs sibling comparisons in a random effect framework and an instrumental variables approach to address the unobserved heterogeneity that may influence mothers' work and welfare decisions. The identification comes from the variation in mothers' different economic incentives that arises from the AFDC benefit structures across U.S. states. We focus on children who were born to single mothers with twelve or fewer years of schooling. The short-run child attainments under consideration are the Peabody Individual Achievement Test math and reading recognition scores from the Children of the National Longitudinal Survey of Youth 1979 cohort. Long-run attainments are a child's number of years of schooling by age 25 and his or her early adulthood labor income, drawn from the Panel Study of Income Dynamics. The REIV estimates imply that, relative to no welfare participation, participating in welfare for one to three years provides up to a 5 percentage point gain in a child's Picture Individual Achievement Test (PIAT) scores. The negative effect of childhood welfare participation on adult earnings found by others is not significant if one accounts for mothers' work decisions. At the estimated values of the model parameters, a mother's number of years of work contributes between $3,000 and $7,000 1996 dollars to her child's labor income, but has no significant effect on the child's PIAT test scores. Finally, children's number of years of schooling are relatively unresponsive to mothers' work and welfare participation choices.

• Item Type: MPRA Paper
• Language: English
• Keywords: Welfare reform, childhood cognitive ability, female work, random effects instrumental variables
• Subjects: J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility ; Family Planning ; Child Care ; Children ; Youth; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I30 - General; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply

References

Becker, G. and Tomes N., Child Endowments and the Quantity and Quality of Children." Journal of Political Economy, 84(4), pp.143-162

Bernal, R. Employment and Child Care Decisions of Mothers and the Well-being of Their Children." International Economic Review. 2007.

Bjorklund, A. and Jantti, M. Intergenerational Income Mobility in Sweden Compared to the United States." American Economic Review 87 (5), Dec. 1997: 1009

Blank, R. and Ruggles, P. When Do Women Use AFDC and Food Stamps? The Dynamics of Eligibility vs. Participation." Journal of Human Resources 1996, Winter.

Brien, M. and Swann, C. \Parental WIC Participation and Infant Health: Selection and Maternal Fixed Effects." University of Virginia Department of Economics. Discussion Paper 295. June 1997.

Corcoran, M. \Rags to Rags: Poverty and Mobility in the United States." Annual Review of Sociology Vol. 21 (1995), pp. 237-67.

Corcoran, M., Gordan, R., Laren, D., and Solon, G. The Association Between Men's Economic Status and Their Family and Community Origins." Journal of Human Resources Vol. 27, Issue 4 (Autumn, 1992), pp. 575

Currie, J. Welfare and the Well-Being of Children: Fundamentals of Pure and Applied Economics No.59. Switzerland: Hardwood Academic Publishers. 1995.

Currie, J. The Effect of Welfare on Child Outcomes." Welfare, the Family, and Reproductive Behavior. Washington, DC: National Academy Press, 1998.

Currie, J. and Thomas, D. Does Head Start Make a Difference?" American Economic Review Vol. 85(3) (June 1995) pp. 341-64.

Currie, J. and Thomas, D. Early Test Scores, Socioeconomic Status and Future Outcomes."Working Paper 6943, National Bureau of Economic Research, Cambridge, MA, 1999.

Dahl, G, and Lochner, L. The Impact of Family Income on Child Achievement." Working Paper 11270, National Bureau of Economic Research, Cambridge, MA, February 2005.

Duncan, G. \Families and Neighbors as Sources of Disadvantage in the Schooling Decisions of White and Black Adolescents." American Journal of Education, Vol. 103(1), 1994, pp. 20-53.

Duncan G., and Brooks-Gunn J. Consequences of Growing Up Poor." Russell Sage Foundation,New York. 1997.

Duncan G., Magnuson K., and Ludwig, J. The Endogeneity Problem in Developmental Studies." Research in Human Development I (1&2), 2004 pp. 59-80.

Fitzgerald, J. Local Labor Markets and Local Area Effects on Welfare Duration." Journal of Policy Analysis and Management Vol 14. (Winter 1995) pp. 43

Fitzgerald, J., Gottschalk, P., and Moffitt, R. An Analysis of Sample Attrition in Panel Data:The Michigan Panel Study of Income Dynamics." Working Paper T0220, National Bureau of Economic Research, Cambridge, MA, February 1998.

Fraker, T., Moffitt, R., and Wolf, D.,Effective Tax Rates and Guarantees in the AFDC Program,1967{1982." Journal of Human Resources Vol. 20(2), Spring 1985, pp. 251-263.

Gottschalk, P., McLanahan, S., and Far, S. 1994. The Dynamics and Intergenerational Transmission of Poverty and Welfare Participation." Confronting Poverty, edited by Sheldon H.

Danziger, Gary D. Sandefur, and Daniel H. Weinberg, Harvard University Press, New York.

Gottschalk, P. AFDC Participation Across Generations." American Economic Review Vol. 80(2): pp. 367-71.

Garces E., Duncan, T., and Currie, J. Longer Run Effects of Head Start." American Economic Review, Vol. 92(4), (September 2002), pp. 999-1012.

Haskins, R. Liberal and Conservative Influences on the Welfare Reform Legislation of 1996." For Better and For Worse: Welfare Reform and the Well-Being of Children and Families, edited by Duncan, G. and Chase-Lansdale, L., Russell Sage Foundation, New York, 2001.

Haveman, R. and Wolfe, B. The Determinants of Children's Attainments." Journal of Economic Literature, Vol. 33 (December 1995), pp. 1829-78.

Haveman, R.,Wolfe, B., and Wilson, K. Childhood Poverty and Adolescent Schooling and Fertility Outcomes: Reduced-Form and Structural Estimates." Consequences of Growing Up Poor, edited by Duncan, G., and Brooks-Gunn, J., Russell Sage Foundation, New York. 1999.

Heckman, J. Doing it Right: Job Training and Education." Public Interest 135 (1999), pp.86-107.

Hofferth, S. Who Enrolls in Head Start? A Demographic Analysis of Head Start-Eligible Children." Early Childhood Research Quarterly Vol. 9 (1994), pp. 243-268.

Hill, M., and O'Neill, J., Family Endowments and the Achievement of Young Children with Special Reference to the Underclass" Journal of Human Resources Vol. 29(4), 1994, pp. 1064-1100.

Hill, M., and Duncan G., Parental Family Income and the Socioeconomic Attainment of Children." Social Science Research Vol 16, 1987, pp. 39-73.

Hoynes, H. Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP." Econometrica, Vol. 64, No. 2 (March, 1996), pp. 295-332.

Hoynes, H. Work, Welfare, and Family Structure: What Have We Learned?" Working Paper 5664, National Bureau of Economic Research, Cambridge, MA, July 1996.

Keane, M. and Moffitt, R. A Structural Model of Multiple Welfare Program Participation and Labor Supply." International Economic Review, Vol. 39, No. 3 (Aug. 1998), pp. 553-89.

Keane, M. and Wolpin, K. Estimating Welfare Effects Consistent With Forward-Looking Behavior: Part I: Lessons From A Simulation Exercise." Journal of Human Resources, Vol. 37, No.3 (2002), pp. 570-99.

Keane, M. and Wolpin, K. Estimating Welfare Effects Consistent With Forward-Looking Behavior: Part II: Empirical Results." Journal of Human Resources, Vol. 37, No. 3 (2002), pp. 600{22.

Knox, V. The Effects of Child Support Payments on Developmental Outcomes for Elementary School-Age Children." Journal of Human Resources, Vol. 31, No. 4 (1996), pp. 816-40.

McKinnish T., Sanders, S., and Smith., J., Estimates of Effective Guarantees and Tax Rates in the AFDC Program for the POST-OBRA Period." Journal of Human Resources, Vol. 34(2), Spring, 1999, pp. 312-345.

Metcalfe, J., Rubin, D., Napoleone, M., and Nichols, K., Effect of Food Supplementation (WIC) During Pregnancy on Birth Weight." American Journal of Clinical Nutrition Vol. 41 (May 1985).

Meyer, B. and Rosenbaum, D., Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers." Quarterly Journal of Economics Vol. 116 (August 2001) pp. 1063-114.

Moffitt, R. An Economic Model of Welfare Stigma," American Economic Review, Vol 73 1983,38 pp. 1023-35.

Moffitt, R. Estimating the Value of In-Kind Transfers: The Case of Food Stamps." Econometrica Vol 57(2) 1989 pp.385-410.

Moffitt, R. The Temporary Assistance for Needy Families Program" Means-Tested Transfers in the U.S.,2002, http://www.nber.org/books/means-tested/

Morris P., Duncan G., and Clark-Kauffman E., Child Well-Being in An Era of Welfare Reform: The Sensitivity of Transitions in Development to Policy Change." manuscript, February 2004.

Morris, P., Duncan, G., and Rodrigues, C., Does Money Really Matter? Estimating Impacts of Family Income on Children's Achievement with Data from Random-Assignment Experiments." manuscript, February 2004.

Peters, E., Patterns of Intergenerational Mobility in Income and Earnings." Review of Economics and Statistics, 1992, 74(3), pp. 456-66.

Pierret, C. National Longitudinal Survey of Youth: 1979 Cohort at 25." Monthly Labor Review, (May 2005), pp. 3-7.

Ribar, D. A Multinomial Logit Analysis of Teenage Fertility and High School Completion." Economics of Education Review 12(2), (June 1993), pp. 153-64.

Ruggles, P. Drawing the Line: Alternative Poverty Measures and Their Implications for Public Policy." Washington, D.C.: Urban Institute Press, 1990.

Sandefur, D., McLanahan S., and Wojtkiewicz, R., The Effects of Parental Marital Status During Adolescence on High School Graduation," Social Forces Vol. 71(1) (September 1992) pp. 103-21.

Solon, Gary. "Intergenerational Income Mobility in the United States." American Economic Review 82 (3), June 1992: pp. 393-408.

Venti, S. The Effects of Income Maintenance on Work, Schooling, and Non-Market Activities of Youth." Review of Economics and Statistics Vol. 66(1), pp. 16-25.

Wooldridge, J. Econometric Analysis of Cross Section and Panel Data", Chapter 18. Cambridge, MA: MIT Press.

Zimmerman, David J., Regression Toward Mediocrity in Economic Stature." American Economic Review 82 (3), June 1992: pp. 409-29.