Saturday, 15 January 2005 - 2:00 PM

This presentation is part of: Income Policy and Economic Development

The Impact of Benefit Levels and Local Area Economic Conditions on the Living Arrangements of Mothers

Policymakers are consumers of social science research on living arrangements in order to get a handle on the frequency of non-marital childbearing, single parent families, marriage rates and the relationship between these family changes and program participation. One of the four major goals of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193 is to “encourage the formation and maintenance of two-parent families.” In large part, the desire to encourage and maintain two-parent families is a reaction to striking changes in the composition of families over the last 30 years, high poverty rates of single-mother households and research linking the benefits for children of growing up in a family with both biological parents. Focusing on the living arrangements of mothers is important in understanding the contexts in which children are being raised as well as evaluating how public policy affects the sorting of mothers into various living arrangements. This paper seeks to merge two separate but related strands of literature. The welfare benefit literature which focuses on the effects of AFDC/TANF benefits on the incidence of single motherhood and the household formation literature which focuses on the effects of local area economic conditions on the household formation decisions of the young and elderly. This study uses census data for 1980, 1990 and 2000 to look at the impact of personal characteristics and policy indicators on the living arrangements of mothers. Policy variables are the maximum TANF/FS benefit for a family of three, local area quality adjusted housing costs, local area unemployment rate and sex-ratios, as well as the availability of subsidized housing. 192,445 mothers between the ages of 16 and 45 with children 4 or younger are sampled in 91 Metropolitan Statistical Areas (MSAs) and analyzed in a pooled cross-model with fixed area and time specific effects using multinomial logistic regression to examine the living arrangements of mothers. Results suggest that a $100 increase in the value of TANF/FS benefits is negatively associated with the probability of marriage relative to a mother living alone or cohabiting. Prior research has suggested that unmarried low income couples may choose to cohabit rather than marry to engage in income pooling without risking the loss of TANF associated with marriage. Local area unemployment rates are negatively associated with the probability of marriage relative to a mother living alone and positively associated with the probability of cohabiting relative to marriage. Local area sex ratios are positively associated with marriage relative to living alone, cohabiting or living with extended family. The availability of subsidized housing is negatively associated with marriage relative to living alone, cohabiting or living with extended family. Current marriage promotion policy focuses exclusively on providing relationship counseling services to unmarried parents. These results suggest that the current approach misses important local area economic factors which impact parents living arrangements.

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