Overall, welfare reform is expected to increase the probability that a child lives with a married parent and decrease the probability that a child lives with an unmar-
ried parent. It is also possible, through reductions in income or increases in the cost of complying with welfare rules, that welfare reform may lead to an increase in the
probability that a child lives with neither parent. We also may see differences across race and ethnicity.
III. Literature Review
Of the large volume of research on welfare reform, most of the stud- ies focus on impacts on welfare participation, employment, and earnings. The broader
literature is well summarized in Blank 2002 and Grogger and Karoly 2005. Here we limit our attention to the much smaller literature on the impact of welfare waivers
and TANF on living arrangements.
A wide range of outcomes has been examined in the literature on welfare reform and living arrangements. The most commonly measured are the marital and cohabi-
tation status of women, with evidence coming from nonexperimental studies and experimental evaluations of AFDC waivers. Nonexperimental studies of welfare
reform and marriage include: Acs and Nelson 2004; Bitler et al. 2004; Ellwood 2000; Fitzgerald and Ribar 2004; Kaestner and Kaushal 2005; Lewis 2003;
Rosenbaum 2003; Schoeni and Blank 2000; and Susin and Adler 2002. The results in the nonexperimental literature are mixed. For example, some studies find
that reform leads to increases in marriage Schoeni and Blank 2000, others find reform leads to decreases in marriage Rosenbaum 2003; Bitler et al. 2004; Fitzgerald
and Ribar 2004, and finally others find small or insignificant effects Ellwood 2000; Kaestner and Kaushal 2005.
The evidence from experimental studies of welfare reform and marriage is also mixed—with few statistically significant results and both positive and negative
treatment effects see reviews by Grogger and Karoly 2005; Fein et al. 2002; and the meta-analysis by Gennetian and Knox 2003. The study by Harknett and Gennetian
2003 is particularly notable in this regard: in their analysis of Canada’s SSP pro- gram, they find a statistically significant increase in marriage in one province and a
statistically significant decrease in marriage in another. Both Gennetian and Knox 2003 and Grogger and Karoly 2005 present results suggesting that the most
TANF-like waivers show more consistently negative not always significant impacts on marriage while reforms with generous earnings disregards but lacking stringent
work requirements or sanctions lead to increases in marriage.
This literature largely takes the woman as the unit of observation. This analysis may be incomplete, however. If one response to reform is for other, older relatives to
care for children, then focusing on samples of single mothers, welfare recipients, or even all women of childbearing age will miss these changes.
4
As such, it is surprising
4. This is also an issue with experimental analyses. The data on children are generally collected only as part of surveys of former recipients treatment and control members several years after random assignment.
Therefore, these data contain detailed information only for children who are still coresident with their parents.
The Journal of Human Resources 6
how little econometric research focuses directly on welfare reform and children’s liv- ing arrangements.
We are aware of few publications on this topic; an exception is Acs and Nelson 2004. Acs and Nelson 2004 use data from two panels of the National Survey of
American Families NSAF to examine the impacts of specific features of TANF— taken one at a time—on children’s and women’s living arrangements. Overall, their
findings are mixed, but they suggest that family caps may have increased the proba- bility that children live in two-parent families and aggressive child-support enforce-
ment may have led to fewer single-parent and more two-parent families. They note that their estimates are identified by specific policy changes between 1997 and 1999
in the 13 states identified within the NSAF, and thus may reflect only short-term dif- ferences. Their data do not span the pre-PRWORA period, so they cannot identify
effects of waivers. They do include state fixed effects, one year fixed effect, and indi- vidual covariates along with the unemployment rate and its lag, but they do not con-
trol for other policy changes.
5
Our approach has several advantages compared with the limited existing work on the effects of reform on children’s living arrangements. Our data span the period
1989–2000, including some prereform data and data from the waiver period. Consequently, we can use variation in the timing of state welfare waivers imple-
mented from 1992–96 to identify effects of reform. In contrast, it is difficult to iden- tify effects of TANF as it was implemented quite quickly. Thus, in a model with a full
set of year fixed effects, TANF identification comes from cross-sectional variation in the timing of TANF implementation within 1997.
6
We include data from more states and have a much larger sample than would be possible with the NSAF or the SIPP.
The CPS sample should provide a snapshot of living arrangements for all children not in institutional settings or in transient homeless facilities. We also include a number
of other policy variables to account for other factors that may be driving changes in living arrangements.
IV. Data
