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

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  • Ozturk, Orgul
  • Chyi, hau

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.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10110.

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Date of creation: 2006
Date of revision: 2008
Handle: RePEc:pra:mprapa:10110

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Keywords: Welfare reform; childhood cognitive ability; female work; random effects instrumental variables;

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  1. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part I: Lessons from a Simulation Exercise," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 570-599.
  2. Peters, H Elizabeth, 1992. "Patterns of Intergenerational Mobility in Income and Earnings," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 456-66, August.
  3. Gottschalk, Peter, 1990. "AFDC Participation across Generations," American Economic Review, American Economic Association, American Economic Association, vol. 80(2), pages 367-71, May.
  4. Janet Currie & Duncan Thomas, 1993. "Does Head Start Make a Difference?," NBER Working Papers 4406, National Bureau of Economic Research, Inc.
  5. Terra McKinnish & Seth Sanders & Jeffrey Smith, 1999. "Estimates of Effective Guarantees and Tax Rates in the AFDC Program for the Post-OBRA Period," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 312-345.
  6. M. Keane & R. Mofitt, 1995. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," Working Papers 95-4, Brown University, Department of Economics.
  7. Janet Currie & Duncan Thomas, 1999. "Early Test Scores, Socioeconomic Status and Future Outcomes," NBER Working Papers 6943, National Bureau of Economic Research, Inc.
  8. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, American Economic Association, vol. 73(5), pages 1023-35, December.
  9. Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, Econometric Society, vol. 64(2), pages 295-332, March.
  10. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 393-408, June.
  11. Virginia W. Knox, 1996. "The Effects of Child Support Payments on Developmental Outcomes for Elementary School-Age Children," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 816-840.
  12. M. Anne Hill & June O'Neill, 1994. "Family Endowments and the Achievement of Young Children with Special Reference to the Underclass," Journal of Human Resources, University of Wisconsin Press, vol. 29(4), pages 1064-1100.
  13. Venti, Steven F, 1984. "The Effects of Income Maintenance on Work, Schooling, and Non-Market Activities of Youth," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 16-25, February.
  14. Ribar, David C., 1993. "A multinomial logit analysis of teenage fertility and high school completion," Economics of Education Review, Elsevier, Elsevier, vol. 12(2), pages 153-164, June.
  15. Raquel Bernal, 2004. "Employment and Child Care Decisions of Mothers and the Well-being of their Children," Econometric Society 2004 North American Winter Meetings, Econometric Society 361, Econometric Society.
  16. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part II: Empirical Results," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 600-622.
  17. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
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