The Effects of Single Mothers' Welfare Participation and Work Decisions on Children's Attainments
AbstractThis research examines the effects of mothers' welfare and work decisions on their children's attainments using two types of estimation methods in Stata: (1) an instrumental variables (IV) and (2) a nonlinear simultaneous equation estimation. 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. We use the popular Stata command -ivreg2- to estimate the coefficients. Since production function of a child's ability can be written as a nonlinear function in a mother's decisions, we can also use the -nlsur- command to simulatneously estimate the production function as well as the (first-stage) IV projections. We focus on children who were born to single mothers with twelve or fewer years of schooling. IVs in this study are a mother's expected years of work and welfare use during childhood. The identification comes from the variation in mothers' different economic incentives that arises from the AFDC benefit structures across U.S. states. The 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 is relatively unresponsive to mothers' work and welfare participation choices.
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Bibliographic InfoPaper provided by Stata Users Group in its series Summer North American Stata Users' Group Meetings 2008 with number 9.
Date of creation: 29 Jul 2008
Date of revision: 28 Aug 2008
Other versions of this item:
- Ozturk, Orgul & Chyi, hau, 2006. "The Effects of Single Mothers' Welfare Participation and Work Decisions on Children's Attainments," MPRA Paper 10110, University Library of Munich, Germany, revised 2008.
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-05 (All new papers)
- NEP-HAP-2008-09-05 (Economics of Happiness)
- NEP-LAB-2008-09-05 (Labour Economics)
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