IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/5738.html
   My bibliography  Save this paper

Cash Welfare as a Consumption Smoothing Mechanism for Single Mothers

Author

Listed:
  • Jonathan Gruber

Abstract

While there has been considerable research on the disincentive effects of cash welfare under the Aid to Families with Dependent Children (AFDC) program, there is little evidence on the benefits of the program for single mothers and their children. One potential benefit of this program is that it provides short-run consumption insurance for women at the point that they become single mothers. This is only true, however, to the extent that the program is not crowding out other sources of support, such as own savings, labor supply, or transfers from others. I assess the importance of this insurance mechanism by measuring the extent to which AFDC smooths the consumption of women who transition to single motherhood. I use longitudinal data on family structure and consumption expenditures on food and housing from the Panel Study of Income Dynamics (PSID), matched to information on the welfare benefits available in each state and year over the 1968-1985 period. I find that raising potential benefits by one dollar raises the food and housing consumption of all women who become single mothers (and their families) by 30 cents. This estimate implies that for each dollar of AFDC received by this population their consumption of these categories of goods rises by up to 95 cents. This consumption smoothing benefit appears to be larger for women who become single mothers through marital dissolution, rather than through out-of-wedlock childbearing; this is due to increased housing expenditures of the former group but not of the latter.

Suggested Citation

  • Jonathan Gruber, 1996. "Cash Welfare as a Consumption Smoothing Mechanism for Single Mothers," NBER Working Papers 5738, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5738
    Note: PE LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w5738.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cecilia Elena Rouse, 1997. "Private School Vouchers and Student Achievement: An Evaluation of the Milwaukee Parental Choice Program," NBER Working Papers 5964, National Bureau of Economic Research, Inc.
    2. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2003. "Asking consumption questions in general purpose surveys," Economic Journal, Royal Economic Society, vol. 113(491), pages 540-567, November.
    3. Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2009. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 109-139, October.
    4. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    5. Casey B. Mulligan, 1999. "Substition over Time: Another Look at Life-Cycle Labor Supply," NBER Chapters,in: NBER Macroeconomics Annual 1998, volume 13, pages 75-152 National Bureau of Economic Research, Inc.
    6. Levine, Phillip B. & Zimmerman, David J., 2005. "Children's welfare exposure and subsequent development," Journal of Public Economics, Elsevier, vol. 89(1), pages 31-56, January.
    7. Alan J. Auerbach & William G. Gale & Benjamin H. Harris, 2010. "Activist Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 141-164, Fall.
    8. Paul Gertler & Jonathan Gruber, 2002. "Insuring Consumption Against Illness," American Economic Review, American Economic Association, vol. 92(1), pages 51-70, March.
    9. Thomas J. Kniesner & James P. Ziliak, 2002. "Tax Reform and Automatic Stabilization," American Economic Review, American Economic Association, vol. 92(3), pages 590-612, June.
    10. Rubalcava, L. & Thomas, D., 2000. "Family Bargaining and Welfare," Papers 00-10, RAND - Labor and Population Program.
    11. James P. Ziliak, 2003. "Income Transfers and Assets of the Poor," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 63-76, February.
    12. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    13. James P. Ziliak & David N. Figlio, 2000. "Geographic Differences in AFDC and Food Stamp Caseloads in the Welfare Reform Era," JCPR Working Papers 180, Northwestern University/University of Chicago Joint Center for Poverty Research.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:5738. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.