Review of “The Effect of Welfare Payments on the Marriage and Fertility Behavior of Unwed Mothers” Jeff Grogger and Step

1. Review of “The Effect of Welfare Payments on the Marriage and Fertility Behavior of Unwed Mothers”Jeff Grogger and Stephen G. Bronars Ali Hamed

2. Research Question Does higher welfare benefits cause initially unwed mothers to • delay marriage or even forget about it? • have more children?

3. Why Bother??? • Socially • Decline in marriage, increase in divorce • Out of wedlock childbearing • Economically • Tax payer’s money • Work force • Politically

4. Main Findings • For initially unwed white mothers, higher welfare benefits forestalled marriage. • 10% increase in base benefits would decrease the one-year marriage rate from 30% to 28.4% • For initially unwed black mothers, higher benefits lead to more children • 10% increase in base benefits would increase fertility (2 years after first birth) from 20% to 21% • No evidence to support family cap

5. Previous Work: What is Being Added? • Important and understudied problem • Only handful about the fertility research • NONE about marriage • Novel approach: Twins • Why? • Thought experiment • Issues

6. Analytical Framework

7. Assumptions • γ (pure twin effect) does NOT vary by state • If γi then exact collinearity with welfare differential for state i • The difference between mothers of twins and mothers of singletons are not different form one state to another • γ is constant over time • NO spells are censored • NO duration dependence for spells • Benefits do NOT vary with time

8. Hazard Model • Probability of ending a spell is a function of • Elapsed duration of the spell • Welfare benefits • Twin dummy • State dummies • Interaction dummies between state and maternity cohorts • Mother’s age at first birth

9. Data • 1980 Census Public Use Microdata Sample (PUMS) • Households in which # of children = mother’s total fertility • Initial sample of 89,000 initially unwed mothers • Subtract • 31,000 AFDC benefits not available for all states before 1975 • 21,000 (marriage) and 22,000 (fertility) • State/maternity cohort must include at least one completed spell • State/maternity cohort must include at least one twin

10. Data • State of residence vs. state of birth • 13% moved (of those for which the data was available) • “if welfare drives mobility, then our results may be biased in an unknown direction.” • No remedy: define benefits by both state of residence and state of child's birth • Split the sample by race • Claim: samples means for benefit levels, time to first marriage and time to next birth are comparable to those in the U.S. population

11. Results • Significance for • Time to marriage for initially unwed white women • Fertility for initially unwed black women • Moderate effect for both • Racial differences explained by Neal (2000) and Wilson (1987) • Wilson: black women face poorer marriage market • Neal: welfare benefits, marriage market and wealth

12. Questions Tala, my one-year old niece