Welfare Reform and Children's Short-Run Attainments: A Structural Approach

Chyi, Hau and Ozturk, Orgul (2006): Welfare Reform and Children's Short-Run Attainments: A Structural Approach.

Abstract

In this paper, we develop a dynamic structural model of single mothers' work and welfare participation decisions while their children are young. This model is used to measure the effects of mothers' decisions on short run attainments of the children of NLSY 79. Using PIAT Math test score as a measure of attainment, we find that both single mothers' work and welfare use in the first five years of their children's lives have a positive effect on children's outcomes, but this effect declines with initial ability. The higher the initial ability of a child, the lower the positive impact work and welfare have. In fact, in the case of welfare the effect is negative if a child has more than median initial ability. Furthermore, we find that the work requirement reduces a single mother's use of welfare. However, the net effect of the work requirement on a child's test score depends on whether the mother's work brings in enough labor income to compensate for the loss of welfare benefits. We also look at the implications of the welfare eligibility time limit and maternal leave policies on children's outcomes.

• Item Type: MPRA Paper
• Language: English
• Keywords: Welfare reform, childhood cognitive ability, female work, dynamic choice model, maximum likelihood
• Subjects: J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs; J - Labor and Demographic Economics > J1 - Demographic Economics > J18 - Public Policy

References

Bernal, R.(2007) The Effect of Maternal Employment and Child Care on Children's Cognitive Development." International Economic Review

Citro, C. and Michael, R., Measuring Poverty: A New Approach, Washington DC: National Academy Press, 1995.

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. 575-601.

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.

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

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.(1990) AFDC Participation Across Generations." American Economic Review Vol. 80(2): pp. 367-71.

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

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.

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.

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

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

McKinnish T., Sanders, S., and Smith., J., Estimates of Eective 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.

Pepper, John V.(2000), "The Intergenerational Transmission of Welfare Receipt: A Nonparametric Bounds Analysis" The Review of Economics and Statistics, MIT Press, vol. 82(3), pp 472-488, August

Todd, Petra and Wolpin, Kenneth I.,Ex Ante Evaluation of Social Programs(May 2, 2006). PIER Working Paper No. 06-022

Ziliak, James P. 2007. "Making Work Pay: Changes in Effective Tax Rates and Guarantees in U.S. Transfer Programs, 1983-2002," Journal of Human Resources, 42(3): 619-642.