“Maternity Leave” for the Poor: Do Exemptions From Welfare Work Requirements Affect Employment Rates Among Mothers of Young Children?

Background & Purpose: This paper uses the nationally-representative Current Population Survey (CPS) to identify the labor market effects of a welfare policy aimed at mothers of infants and toddlers. Age-of-youngest-child (AYC) exemptions determine when welfare recipients must comply with program work requirements after having a child and vary in length by state and calendar year. To the extent that AYC exemptions allow mothers to stay at home with young children, their intent is analogous to maternity leave policies, which have been shown to benefit both parent employment stability and child well-being. In contrast to maternity leave provided through the Family and Medical Leave Act (FMLA), which guarantees job security, AYC exemptions provide paid leave without job protection, potentially creating an incentive for mothers to quit jobs leading up to the birth. Thus, while family leave policies increase the likelihood that women will take leave (decrease work) but maintain employment, exemptions from welfare work requirements are more likely to decrease employment rates in the months surrounding a birth.

Methods: Using six years of data from the June Fertility Supplement of the CPS, I estimate the effect of AYC exemptions from welfare work requirements on the employment rates of single mothers with young children. My statistical approach takes advantage of policy variation over time and across states, as well as between a pseudo-treatment group of single mothers with young children and two comparison groups, to isolate the behavioral impacts of exemptions from work requirements, net of individual differences and concurrent policy or economic changes.

Results: Eligibility for an exemption is associated with a modest negative effect, four percentage points, on the probability of maternal employment. This result is robust to the inclusion of state and year fixed effects, as well as time varying state policies.

Conclusion: The magnitude of this effect is comparable to previously estimated effects of substantial increases in welfare benefits and declines in child care subsidies. The trend during the 1990s toward shorter exemption lengths effectively pulled some single mothers into the labor market sooner after a birth than they would have gone otherwise. States with longer exemption lengths are offering a potential source of paid maternity leave to workers who are unlikely to be eligible for leave through the FMLA, but without the job projection offered by employer-provided leave.