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Appl Econ Lett. 1997 Oct;4(10):607-10.

Welfare and the family size decision of low-income, two-parent families.



This study determines the increase in family size given an increase in the per child welfare benefit for a family with children in the US. The family size decision was modeled as a discrete choice decision. Data were obtained from the 1980-91 March Current Population Surveys of the US Census Bureau on 13,516 low-income, nonmilitary, non-farm, two-parent families with at least one dependent child. Low income was any amount under twice the official poverty level. Parents were limited to ages 18-40 years. Alaska and Hawaii were excluded. The data sets for 1979-90 were pooled. The sample included 10% Blacks and 27% receiving some amount of welfare. Average ages were 28.9 years for mothers and 30.8 years for fathers. The average number of children was 2.43. Findings from the ordered probit model indicate that education had a negative impact on family size, and age and race had positive impacts. Wages did not have a significant effect. The state unemployment rate and the average state income had negative effects. Unearned income had a small but significant effect on family size. The marginal welfare benefit had a positive impact. Findings reinforce the wealth hypothesis, that wealthier societies have smaller family sizes. Family size declines with increases in wages and education, which reflect increases in opportunity costs for time. Family size increases with age, as rearing children is labor-intensive. Family size increases with unearned income and welfare benefits that make childbearing affordable. It is argued that poor people in developed societies behave more consistently like poor people in developing countries. A 100% increase in the per child welfare benefit resulted in a 2% increase in the number of children. The policy implication is that a considerable increase in welfare benefits will have only trivial behavioral impacts for the poor on family size decisions.

[Indexed for MEDLINE]

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