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Does Welfare Play Any Role in Female Headship Decisions?

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  • Hilary Williamson Hoynes

Abstract

During the 30 years, the composition of white and black families in the US has changed dramatically. In 1960, less than 10% of families with children were headed by a single mother, while in 1990 more than 20% of families with children were headed by females. A large body of research has focused on the role of the U.S. welfare system and particularly of the Aid to Families with Dependent Children (AFDC) program, in contributing to these changes in family structure. Most studies use cross-sectional data and identify the effect of welfare on female headship through interstate variation in the AFDC program. Recent research finds that controlling for state effects has a large impact on the estimated welfare effect. This paper examines why state effects matter for estimating the role of welfare in female headship decisions by examining the of individual effects and policy endogeneity. An explanation for why state effects matter is that the composition of the population across the states differs, and the composition is related to the generosity of the state's welfare program. If that is true, then controlling for individual effects should have the same result as controlling for state effects. We also examine the endogeneity of AFDC policy by including controls representing the determinants of state welfare generosity. The results show that after controlling for individual effects, there is no evidence that welfare contributes to increasing propensities to form female headed households for either whites or blacks. Further, the results suggest that welfare-induced migration among blacks leads to an upward bias in the estimated welfare effect in previous studies.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5149.

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Date of creation: Jun 1995
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Publication status: published as Journal of Public Economics, Vol. 65, no. 2 (August 1997): 89-117.
Handle: RePEc:nbr:nberwo:5149

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  1. Robert Hutchens & George Jakubson & Saul Schwartz, 1989. "AFDC and the Formation of Subfamilies," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 599-628.
  2. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  3. Besley, Timothy & Case, Anne, 2000. "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(467), pages F672-94, November.
  4. Moffitt, Robert & Wolfe, Barbara L, 1992. "The Effect of the Medicaid Program on Welfare Participation and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 615-26, November.
  5. Darity, William, Jr & Myers, Samuel L, Jr, 1983. "Changes in Black Family Structure: Implications for Welfare Dependency," American Economic Review, American Economic Association, American Economic Association, vol. 73(2), pages 59-64, May.
  6. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, Econometric Society, vol. 52(2), pages 271-320, March.
  7. Sara McLanahan, 1988. "Family structure and dependency: Early transitions to female household headship," Demography, Springer, Springer, vol. 25(1), pages 1-16, February.
  8. Robert Moffitt, 1994. "Welfare Effects on Female Headship with Area Effects," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 621-636.
  9. James M. Poterba, 1993. "State Responses to Fiscal Crisis: The Effects of Budgetary Institutionsand Politics," NBER Working Papers 4375, National Bureau of Economic Research, Inc.
  10. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
  11. Greg Duncan & Saul Hoffman, 1990. "Welfare benefits, economic opportunities, and out-of-wedlock births among black teenage girls," Demography, Springer, Springer, vol. 27(4), pages 519-535, November.
  12. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
  13. Danziger, Sheldon, et al, 1982. "Work and Welfare as Determinants of Female Poverty and Household Headship," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 97(3), pages 519-34, August.
  14. Saul D. Hoffman & Greg J. Duncan, 1988. "A Comparison of Choice-Based Multinomial and Nested Logit Models: The Family Structure and Welfare Use Decisions of Divorced or Separated Women," Journal of Human Resources, University of Wisconsin Press, vol. 23(4), pages 550-562.
  15. Ellwood, David T & Crane, Jonathan, 1990. "Family Change among Black Americans: What Do We Know?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 4(4), pages 65-84, Fall.
  16. Schultz, T.P., 1993. "Marital Status and Fertility in the United States: Welfare and Labor Market Effects," Papers, Yale - Economic Growth Center 703, Yale - Economic Growth Center.
  17. Saul D. Hoffman & Greg J. Duncan, 1995. "The Effect of Incomes, Wages, and AFDC Benefits on Marital Disruption," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 19-41.
  18. Moffitt, Robert, 1990. "The effect of the U.S. welfare system on marital status," Journal of Public Economics, Elsevier, Elsevier, vol. 41(1), pages 101-124, February.
  19. J. R. Walker, . "Migration amoung low-income households: Helping the witch doctors reach consensus," Institute for Research on Poverty Discussion Papers, University of Wisconsin Institute for Research on Poverty 1031-94, University of Wisconsin Institute for Research on Poverty.
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