The Effects of Single Mothers’ Welfare Use and Employment Decisions on Children’s Cognitive Development

Abstract:     
We examine the effects of single mothers’ welfare use and employment decisions on children’s short-run cognitive development, as measured by their preschool standardized math test scores. We control for three mechanisms through which these decisions might affect children’s outcomes: direct monetary benefits, parental time invested in the child, and nonpecuniary benefits from in-kind transfer programs such as Medicaid. We employ a correction function approach and control for state fixed effects to address the endogenous nature of welfare participation and employment decisions. Our estimates suggest that although each additional quarter of either mother’s employment or welfare use results in only a small increase in a child’s standardized math test score, the total effects after several quarters are sizable. We allow mothers’ decisions to have varying effects on attainment by children’s observed innate ability and by the intensity of welfare use and employment. A child who has the mean level of observed innate ability with a mother who simultaneously worked and used welfare in all twenty quarters after childbirth experiences an 8.25-standardized-point increase in standardized scores. The positive impact is more pronounced for the more disadvantaged children, who tend to be born to mothers with low Armed Forces Qualification Test (AFQT) scores, or have lower birth weights. We also examine the effects using timing of employment and welfare use, as well as children’s maturity and gender.

Number of Pages in PDF File: 51

Keywords: Welfare reform, childhood cognitive ability, female work, welfare participation

JEL Classification: I3, J13, J22

working papers series