Disaggregating the Impacts of Welfare Reform: Reflections on Five Studies

The five papers in this symposium advance the vital task of disaggregating the impacts of welfare reform. Four report differences across groups defined by location (rural or urban), types of TANF-eligible family, type of family structure, and race and ethnicity. The fifth reports few differences across race and ethnic groups. As our experience with TANF-style welfare grows and opportunities arise to reshape it, policy makers need to understand whether its impacts differ among subgroups, and why any differences exist. These studies provide useful points of departure for future research on these important policy issues.Need; Needs; Policy; Race; Welfare

Teenage Expectations and Desires about Family Formation in the United States

Using data collected in 2000 on a racially and ethnically diverse sample of high school seniors (typically 17-18 years old), this study analyzes teenagers' expectations and desires about marriage, having children, and becoming unwed parents. The study is the first to examine all six outcomes with a common conceptual framework and data set. The conceptual framework combines family context, opportunity cost, and social-psychological perspectives. Each perspective has predictive power. Race, ethnicity, gender, type of religious upbringing, parental education, and parental expectations for their child's education are aspects of family context that consistently show significant relationships with expectations and desires. Adolescents with higher opportunity costs - as indicated by having better grades and higher expectations and aspirations for their schooling - expect and desire to marry and have children at older ages. This finding should be regarded cautiously because there is reason to think that opportunity costs and the outcomes are jointly determined. There is modest empirical support for the social-psychological element of the framework. The study investigates several explanatory variables not considered in previous research - Native American ethnicity, believing in a non-western religion, self-esteem and locus of control - and finds some to be important predictors of expectations and desires about family formation.Family formation, marriage, childbearing, nonmarital childbearing

Do Children from Welfare Families Obtain Less Education?

This study estimates the relationship between parental welfare receipt and children’s adulthood educational attainment. Data come from the Panel Study of Income Dynamics. Cross-sectional regression results confirm findings from previous studies that greater parental welfare receipt is significantly associated with children’s poorer educational attainment. Fixed-effect regressions indicate that the relationship between parental welfare receipt and children’s educational outcomes becomes weaker after controlling for unobserved family characteristics, but they do not eliminate the negative relationship. The relationship between parental welfare receipt and children’s educational attainment is not uniform across childhood stages. Additional analyses suggest that parental welfare receipt is not negatively related to educational attainment if combined with at least quarter-time work by the mother.

How Does Adolescent Fertility Affect the Human Capital and Wages of Young Women?

The consequences of teen childbearing for the future well-being of young women remain controversial. In this paper, we model and estimate the relationship between early childbearing and human capital investment, and its effect on wages in early adulthood. Taking advantage of a large set of potential instruments for fertility—principally state- and county-level indicators of the costs of fertility and fertility control—we use instrumental variables procedures to generate unbiased estimates of the effects of early fertility on education and work experience, and the effects of these outcomes on adult wages. For both black and white women, adolescent fertility substantially reduces years of formal education and teenage work experience. White teenage mothers also obtain less early adult work experience than young women who delay childbearing. We also find that, through these human capital effects, teenage childbearing has a significant effect on a young woman’s market wage at age 25. Our results, unlike those of recent “revisionist” studies, suggest that public policies that reduce teenage childbearing are likely to have positive effects on the economic well-being of many young mothers and their families.

Instrument selection: The case of teenage childbearing and women's educational attainment

Recent research has identified situations in which instrumental variables (IV) estimators are severely biased and has suggested diagnostic tests to identify such situations. We suggest a number of alternative techniques for choosing a set of instruments that satisfy these tests from a universe of a priori plausible candidates, and we apply them to a study of the effects of adolescent childbearing on the educational attainment of young women. We find that substantive results are sensitive to instrument choice, and make two recommendations to the practical researcher: First, it is prudent to begin with a large set of potential instruments, when possible, and pare it down through formal testing rather than to rely on a minimal instrument set justified on a priori grounds. Second, the application of more restrictive tests of instrument validity and relevance can yield results very different from those based on less restrictive tests that produce a more inclusive set of instruments, and is the preferred, conservative approach when improper instrument choice can lead to biased estimates.

Changes in Poverty, Income Inequality and the Standard of Living During the Reagan Years

The record of economic well-being in the 1980s belied Reagan\u27s claim that Americans would be better off if they scaled back the welfare state and cut tax rates. Though the standard of living rose, its growth was no faster than during 1950-1980. Income inequality increased. The rate of poverty at the end qf Reagan\u27s term was the same as in 1980. Cutbacks in income transfers during the Reagan years helped increase both poverty and inequality. Changes in tax policy helped increase inequality but reduced poverty. These policy shifts are not the only reasons for the lack of progress against poverty and the rise in inequality. Broad social and economic factors have been widening income differences and making it harder for families to stay out of poverty. Policy choices during the Reagan Administration reinforced those factors

The Twentieth Century Record of Inequality and Poverty in the United States

When the twentieth century is viewed as a whole, no clear trend in income inequality emerges. Inequality was high and rising during the first three decades and peaked during the Depression. It fell sharply during World War II and remained at the lower level in the 1950s and 1960s. From the 1970s through the mid-1990s inequality steadily increased to levels not seen since World War II, though well below those during the first three decades. The rate of poverty exhibited a long-run downward trend from about 60–70 percent in the earlier years of the century to the 12–14 percent range in recent years, with considerable fluctuation around this secular trend. Changes in inequality were produced largely by demographic and technological changes, the growth and decline of various industries, changes in patterns of international trade, cyclical unemployment, and World War II. The primary drivers of the rate of poverty were economic growth and factors that produced changes in income inequality, particularly demographic change and unemployment. Public policy has reduced the market-generated level of inequality, but since 1950 has had little effect on the trend in inequality. Prior to 1950, the growth of government, and particularly the introduction of a broadly based income tax during World War II, coincided with and partly produced the sharp downward shift in inequality of that era. Government had little effect on poverty rates until 1950. Public income transfer programs have reduced poverty rates appreciably in recent decades. Since World War II, when they have been on a large enough scale to matter, changes in tax and transfer policy have tended to reinforce market-generated trends in inequality and poverty rather than offset them.