Welfare benefits and family-size decisions of never-married women

Since the 1970s, the out-of-wedlock birthrate has been increasing rapidly in the United States and has prompted several states to propose (and in some cases, enact) legislation to deny access to higher AFDC benefits for families in which the mother gives birth while receiving AFDC. The authors investigate whether AFDC benefit levels are systematically related to the family-size decisions of never-married women. Using a Poisson Regression model, applied to Current Population Survey data from the years 1980-1988, they find that the basic benefit level positively influences family size for white and Hispanic women, but not for black women. Incremental benefits for larger families, however, do not affect family-size decisions, suggesting that reducing (or eliminating) this differential will not necessarily reduce the number of illegitimate births. The basic benefit level positively affects the family-size decision of high school dropouts, but not of high school graduates. This suggests that to discourage nonmarital births, policymakers should consider altering the AFDC benefit structure in such a way as to encourage single mothers to complete high school. However, being a high school dropout might be a proxy for some other underlying characteristic of the woman, and inducing women to complete high school who otherwise would not might have no effect whatsoever on nonmarital births.