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Marriage and Economic Incentives: Evidence from a Welfare Experiment

  • Wei-Yin Hu
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    Can economic incentives be used to affect marriage behavior and slow the growth of single-parent families? This paper provides new evidence on the effects of welfare benefit levels on the marital decisions of poor women. Exogenous variation in welfare benefits arises from a randomized experiment carried out in California. Whereas previous studies have measured women's responses to year-to-year changes in welfare benefit changes, I am able to measure responses over longer periods of time. The analysis recognizes that married women can receive AFDC benefits under some circumstances, and distinguishes between transitions into marriage and transitions out of marriage. I find that higher benefits encourage aid recipients who are married to divorce, but have little effect on the probability that single-parent aid recipients marry. The effects on married recipients become larger over time and do not appear to be measuring responses to other, simultaneous changes in California's welfare system. For policy purposes, these results suggest that states can increase the incentive to stay married by increasing two-parent benefits relative to single-parent benefits, an option that only recently became allowed by federal welfare reform.

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    Paper provided by Northwestern University/University of Chicago Joint Center for Poverty Research in its series JCPR Working Papers with number 83.

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    Date of creation: 01 Mar 1999
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    Handle: RePEc:wop:jopovw:83
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    1. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
    2. T. Paul Schultz, 1990. "Testing the Neoclassical Model of Family Labor Supply and Fertility," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 599-634.
    3. Robert Moffitt & David Ribar & Mark Wilhelm, 1998. "The Decline of Welfare Benefits in the US: The Role of Wage Inequality," Economics Working Paper Archive 373, The Johns Hopkins University,Department of Economics.
    4. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
    5. R. A. Moffitt, . "The Effect of Welfare on Marriage and Fertility: What Do We Know and What Do We Need to Know?," Institute for Research on Poverty Discussion Papers 1153-97, University of Wisconsin Institute for Research on Poverty.
    6. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023 Elsevier.
    7. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-96, December.
    8. Lyle P. Groeneveld & Nancy Brandon Tuma & Michael T. Hannan, 1980. "The Effects of Negative Income Tax Programs on Marital Dissolution," Journal of Human Resources, University of Wisconsin Press, vol. 15(4), pages 654-674.
    9. Thomas, D., 1989. "Intra-Household Resource Allocation: An Inferential Approach," Papers 586, Yale - Economic Growth Center.
    10. 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.
    11. R. A. Moffitt & R. Reville & A. E. Winkler, . "Beyond single mothers: Cohabition, marriage, and the U.S. welfare system," Institute for Research on Poverty Discussion Papers 1068-95, University of Wisconsin Institute for Research on Poverty.
    12. Jeff Grogger & Stephen G. Bronars, 2001. "The Effect of Welfare Payments on the Marriage and Fertility Behavior of Unwed Mothers: Results from a Twins Experiment," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 529-545, June.
    13. Strauss, J. & Thomas, D., 1995. "Empirical Modeling of Household and Family Decisions," Papers 95-12, RAND - Reprint Series.
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