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Welfare and Family Stability: Do Benefits Affect When Children Leave the Nest?

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  • Wei-Yin Hu

Abstract

The welfare system has long been criticized for its incentives against marriage. This paper examines one way in which welfare actually may keep families together: the fact that benefits increase with family size may encourage teenagers to stay in welfare-recipient households. Welfare benefit incentives affecting coresidence are twofold: (1) a parent loses benefits if a child leaves the household and (2) a child may receive additional benefits if s/he leaves the parental household. At a theoretical level, these incentives are shown to have an ambiguous effect on the coresidence decision. Empirically, I find that children are more likely to leave their parents the smaller the benefit loss that the parent suffers. This result illustrates a potential side-effect of welfare time limits, which effectively make children less "valuable" to welfare parents who reach the time limit. When children no longer increase the benefits available to low-income parents, more children may leave the parental household before age 18. Welfare's effects on living arrangements are estimated to be considerably stronger than most previously estimated effects on childbearing or female headship.

Suggested Citation

  • Wei-Yin Hu, 2001. "Welfare and Family Stability: Do Benefits Affect When Children Leave the Nest?," Journal of Human Resources, University of Wisconsin Press, vol. 36(2), pages 274-303.
  • Handle: RePEc:uwp:jhriss:v:36:y:2001:i:2:p:274-303
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    Cited by:

    1. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2002. "The Impact of Welfare Reform on Living Arrangements," NBER Working Papers 8784, National Bureau of Economic Research, Inc.
    2. Lemieux, Thomas & Milligan, Kevin, 2008. "Incentive effects of social assistance: A regression discontinuity approach," Journal of Econometrics, Elsevier, vol. 142(2), pages 807-828, February.
    3. Francine D. Blau & Lawrence M. Kahn & FJane Waldfogel, 2004. "The Impact of Welfare Benefits on Single Motherhood and Headship of Young Women: Evidence from the Census," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    4. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "Welfare Reform and Children's Living Arrangements," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
    5. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "Welfare Reform and Children's Living Arrangements," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
    6. Anne Solaz & François-Charles Wolff, 2015. "Intergenerational Correlation of Domestic Work : Does Gender Matter ?," Annals of Economics and Statistics, GENES, issue 117-118, pages 159-184.
    7. Deborah A. Cobb-Clark, 2008. "Leaving Home: What Economics Has to Say about the Living Arrangements of Young Australians," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 41(2), pages 160-176, June.

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