What Determines Family Structure?

We estimate the effects of policy and labor market variables on the fertility, union formation and dissolution, type of union (cohabiting versus married), and partner choices of the NLSY79 cohort of women. These demographic behaviors interact to determine the family structure experienced by the children of these women: living with the biological mother and the married or cohabiting biological father, a married or cohabiting step father, or no man. We find that the average wage rates available to men and women have substantial effects on family structure for children of black and Hispanic mothers, but not for whites. The tax treatment of children also affects family structure. Implementation of welfare reform and passage of unilateral divorce laws had much smaller effects on family structure for the children of this cohort of women, as did changes in welfare benefits. The estimates imply that observed changes from the 1970s to the 2000s in the policy and labor market variables considered here contributed to a reduction in the proportion of time spent living without a father by children of the NLSY79 cohort of women. This suggests that the observed increase in this non-traditional family structure in the U.S. in the last three decades was caused by other factors.family structure

Social Security and the Retirement and Savings Behavior of Low Income Households

In this paper, we develop and estimate a model of retirement and savings incorporating limited borrowing, stochastic wage offers, health status and survival, social security benefits, Medicare and employer provided health insurance coverage, and intentional bequests. The model is estimated on sample of relatively poor households from the first three waves of the Health and Retirement Study (HRS), for whom we would expect social security income to be of particular importance. The estimated model is used to simulate the responses to several counterfactual experiments corresponding to changes in social security rules. These include changes in benefit levels, in the payroll tax, in the social security earnings tax and in early and normal retirement ages.Social Security, Retirement, Savings

Evaluating the Effect of an Antidiscrimination Law Using a Regression-Discontinuity Design

The regression discontinuity (RD) data design is a quasi-experimental design with the defining characteristic that the probability of receiving treatment changes discontinuously as a function of one or more individual characteristics. This data design occasionally arises in economic and other applications but is only infrequently exploited in evaluating the effects of a treatment. We consider the problem of identification and estimation of treatment effects under a RD data design. We offer an interpretation of the IV or so-called Wald estimator as a regression discontinuity estimator. We propose nonparametric estimators of treatment effects and present their asymptotic distribution theory. Then we apply the estimation method to evaluate the effect of EEOC-coverage on minority employment in small U.S. firms.

The consequences of 'in-work' benefit reform in Britain: new evidence from panel data

In October 1999, the British government enacted the Working Families Tax Credit, a generous tax credit aimed at encouraging work among low -income families with children. This paper uses longitudinal data collected between 1991 and 2001 to evaluate the effect of this reform on single mothers. We identify this impact by comparing changes in behavior of lone mothers to changes for single women without children. Our results show that the financial incentives of the reform had powerful effects on a wide range of lone mothers decisions. The reform led to a substantial increase in employment rates of about 7 percentage points, which was driven by both higher rates at which lone mothers remained in the labor force and higher rates at which they entered it. Womens responses were highly heterogeneous, with larger effects for mothers with one pre-school aged child, and virtually no effect for mothers with multiple older children. The reform also led to significant reductions in single mothers subsequent fertility and in the rate at which they married. Our findings suggest that the generous childcare tax credit component of the reform played a key role in explaining the estimated employment responses. Finally, we find relatively large behavioral effects in anticipation of the actual reform, which emphasizes the importance of allowing for such effects in future evaluation research

Unintended Consequences of Welfare Reform: The Case of Divorced Parents

This paper formulates a model to examine the effects of changes in tax-benefit policy on the behavior of divorced parents and the well-being of children in single-parent households. Noncustodial parents choose the level of a child support payment to transfer to custodians. These, in turn, decide over child good expenditures and the allocation of time between market work and parenting. In general, ex-spouses fail to achieve an efficient allocation of their resources. On the custodial side, there are inefficiently high levels of labor supply and inefficiently low levels of expenditures on child goods, while on the noncustodial side child support payments are suboptimally low. Our results rationalize the adverse effects that welfare reforms might have on divorced parents and their children. Such adverse effects may arise because an increase in the custodian's effective wage, either through lower marginal income tax rates or higher childcare subsidies, reinforces the inefficiencies of divorced parents' decisions: that is, such an increase further depresses child support transfers from noncustodial parents and induces custodial parents to work even more. We explore several extensions of this model, link our findings to the existing empirical literature on the impacts of welfare reform, and discuss the implications of our results for policy and further economic analysis.non-intact families, in-work benefit reform, child care, child support, non-cooperation

Anatomy of Welfare Reform Evaluation:Announcement and Implementation Effects

This paper formulates a simple model of female labor force decisions which embeds an in-work benefit reform and explicitly allows for announcement and implementation effects. We explore several mechanisms through which women can respond to the announcement of a reform that increases in-work benefits, including sources of intertemporal substitution, human capital accumulation, and labor market frictions. Using the model�s insights and information of the precise timing of the announcement and implementation of a major UK in-work benefit reform, we estimate its effects on single mothers� behavior. We find large and positive announcement effects on employment decisions. We show that this finding is consistent with the presence of frictions in the labor market. The impact evaluations of this reform which ignore such effects produce implementation effect estimates that are biased downwards by 15 to 35 percent.

The Consequences of ?In-Work? Benefit Reform in Britain : New Evidence from Panel Data

In October 1999, the British government enacted the Working Families? Tax Credit, a generous tax credit aimed at encouraging work among low-income families with children. This paper uses longitudinal data collected between 1991 and 2001 to evaluate the effect of this reform on single mothers. We identify this impact by comparing changes in behavior of lone mothers to changes for single women without children. Our results show that the financial incentives of the reform had powerful effects on a wide range of lone mothers? decisions. The reform led to a substantial increase in employment rates of about 7 percentage points, which was driven by both higher rates at which lone mothers remained in the labor force and higher rates at which they entered it. Women?s responses were highly heterogeneous, with larger effects for mothers with one pre-school aged child, and virtually no effect for mothers with multiple older children. The reform also led to significant reductions in single mothers? subsequent fertility and in the rate at which they married. Our findings suggest that the generous childcare tax credit component of the reform played a key role in explaining the estimated employment responses. Finally, we find relatively large behavioral effects in anticipation of the actual reform, which emphasizes the importance of allowing for such effects in future evaluation research

An introduction to the FRBNY consumer credit panel

In this paper, we introduce the FRBNY Consumer Credit Panel, a new longitudinal database with detailed information on consumer debt and credit. The panel uses a unique sample design and information derived from consumer credit reports to track individuals' and households' access to and use of credit at a quarterly frequency. In any given quarter ranging from the first quarter of 1999 to the present, the panel can be used to compute nationally representative estimates of the levels and changes in various aspects of individual and household liabilities. In addition to describing the sample design, the use of sample weights, and the credit report information included in the database, we provide some comparisons of population statistics and consumer debt estimates derived from our panel with those based on data from the American Community Survey and the Flow of Funds Accounts of the United States

A demographic analysis of the family structure experiences of children in the United States

This paper provides a comprehensive demographic analysis of the family structure experiences of children in the U.S. Childbearing and transitions among co-residential union states defined by single, cohabiting, and married are analyzed jointly. A novel contribution is to distinguish men by their relationship to children: biological father or stepfather. This distinction is rarely made when analyzing union formation, but it is critical for understanding the family structure experiences of children. The analysis uses data from the 1979 cohort of the National Longitudinal Survey of Youth (NLSY79). The results are used to address the following issues: (1) What fraction of their childhood do children spend with the biological father, stepfathers, and no father? (2) How do these fractions vary by the mother's marital status at the time of the child's birth and at the time of the child's conception? (3) How do the family structure experiences of the children of white, black, and Hispanic mothers differ, and what are the proximate demographic determinants of these differences? A key finding is that children of black mothers spend on average only 34.1% of their childhood living with the biological father and mother, compared to 72.8% for whites and 64.1% for Hispanics. The two most important proximate demographic determinants of this large racial gap are the much higher propensity of black women to conceive children outside of a union, and the lower rate of shotgun unions for blacks compared to whites and Hispanics. Another notable finding is that cohabitation plays a negligible role in the family structure experiences of children of white and Hispanic mothers, and even for children of black mothers accounts for only one fifth of time spent living with both biological parents. Finally, we find that children of black, Hispanic, and white mothers spend similar proportions of their lives with stepfathers present, but this similarity masks a much higher stepfather turnover rate among blacks, who are more likely than the other groups to experience a larger number of shorter spells with different stepfathers

A Regression-Discontinuity Evaluation of the Effect of Financial Aid Offers on College Enrollment

Regression-Discontinuity design, program evaluation, selection bias, instrumental variables, financial aid, college enrollment