The Effect of Family Planning Programs on the Fertility of Welfare Recipients: Evidence from Medicaid Claims
Can public programs effectively reduce the number of births to women on public assistance? In this paper, I examine the provision of family planning services to welfare recipients through the Medicaid program. Previous studies of publicly-funded family planning services in the U.S. have produced conflicting and sometimes confounding results, and have exclusively relied on single-equation estimates of family planning program effectiveness. Economic theories suggest that single-equation estimates may understate program effectiveness when the same unobserved variable affects both the fertility outcome and contraceptive behavior. To eliminate the bias that may result from single-equation estimation, I use a bivariate probit model to estimate the effect of contraceptive acceptance on the individual's probability of giving birth. I employ a rich and unique data set created from Medicaid claims and eligibility records of the State of Maryland. Results from bivariate probit estimation show that contraceptive acceptance plays a much larger role in reducing fertility than single-equation estimates would suggest, due to a significant positive correlation between the unobservable variables that affect both fertility and contraception.
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