The Effects of Single Mothers' Welfare Participation Decisions on Children's Attainments

33 Pages Posted: 21 Aug 2008 Last revised: 7 Nov 2013

See all articles by Hau Chyi

Hau Chyi

NORC

Orgul D. Ozturk

University of South Carolina - Moore School of Business - Department of Economics

Date Written: August 28, 2008

Abstract

This research examines the effects of mothers' welfare and work decisions on their children's attainments using a random effect instrumental variables (REIV) estimator. The estimator employs sibling comparisons in a random effect framework and an instrumental variables approach to address the unobserved heterogeneity that may influence mothers' work and welfare decisions. The identification comes from the variation in mothers' different economic incentives that arises from the AFDC benefit structures across U.S. states. We focus on children who were born to single mothers with twelve or fewer years of schooling. The short-run child attainments under consideration are the Peabody Individual Achievement Test math and reading recognition scores from the Children of the National Longitudinal Survey of Youth 1979 cohort. Long-run attainments are a child's number of years of schooling by age 25 and his or her early adulthood labor income, drawn from the Panel Study of Income Dynamics. The REIV estimates imply that, relative to no welfare participation, participating in welfare for one to three years provides up to a 5 percentage point gain in a child's Picture Individual Achievement Test (PIAT) scores. The negative effect of childhood welfare participation on adult earnings found by others is not significant if one accounts for mothers' work decisions. At the estimated values of the model parameters, a mother's number of years of work contributes between $3,000 and $7,000 1996 dollars to her child's labor income, but has no significant effect on the child's PIAT test scores. Finally, children's number of years of schooling are relatively unresponsive to mothers' work and welfare participation choices.

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

JEL Classification: I3, J13, J22

Suggested Citation

Chyi, Hau and Ozturk, Orgul D., The Effects of Single Mothers' Welfare Participation Decisions on Children's Attainments (August 28, 2008). Available at SSRN: https://ssrn.com/abstract=1238160 or http://dx.doi.org/10.2139/ssrn.1238160

Hau Chyi

NORC ( email )

55 E. Monroe, Ste. 4800
Chicago, IL 60603
United States

Orgul D. Ozturk (Contact Author)

University of South Carolina - Moore School of Business - Department of Economics ( email )

The Francis M. Hipp Building
1705 College Street
Columbia, SC 29208
United States

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