The Incentives Of Welfare

What would you do if you were too poor to care for your children? If you said have less children, you have not factored in the economics of welfare:

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) gave states greater flexibility to formulate and implement initiatives to reduce welfare dependency and encourage employment for members of low-income families with children. For the nation, in 2006, 10 years after passage of the Act, the birth rate for women 15 to 50 years old receiving public assistance income in the last 12 months was 155 births per 1,000 women, about three times the rate for women not receiving public assistance (53 births per 1,000 women).

In other words, when you subsidize children, you create the incentive to have more children…3x the national average, in this case. Link via Perry here.

4 Responses to “The Incentives Of Welfare”

  • If you have any solid evidence that women on welfare intentionally have more children in order to receive more welfare (as you claim), I would love to see it. Until then, I will continue to believe that this is just another “Welfare Queen” myth, mostly on the common sense grounds that it seems like such an outlandishly unprofitable scam that I doubt any woman would be that stupid.

    (The statistics you cite above don’t even come close to making your case. I won’t bother to explain why, unless you think that’s necessary – I’m assuming it’s as obvious to you as it is to me.)

  • I agree that this doesn’t prove the issue…but do you disagree with the fundamental premise: namely, that reducing the costs of single parenthood increases the number of children? Of course not all woman will have more children, but it certainly increases the number of children for woman on the margin…which changes the culture…which again increases the number of children for woman on the margin (by margin I mean economic use of the term) etc….you do agree with that, right?

    I looked at my links and found this one, as a decent explanation of the logic behind my claim.

  • It’s dangerous to assume there is a direct relationship between two complex things such as birth rates amongst poor women and economic policy. Birth rates tend to be higher when a number of factors are in play including poor education, social injustice (especially for women), inadequate healthcare, poverty, etc. There are plenty of places in the world that have virtually no subsidization for children or welfare support and higher birth rates. High birthrates in a modern context are a symptom of a mixture of the factors I mentioned above. Focusing on those factors is the only way to remedy the solution. Economic policy will not cause or correct it, it will just make things easier for the families invovled.

    I think this is another great example of a misleading article published by somebody with a political agenda.

  • msondo,

    I agree with what you said…but you can’t deny that in that mix of things that push woman to have more children – more cash, or greater welfare, or more government benefits, has to be a push in the “more kids” direction, right?

    Granted, it isn’t the single factor, or even the main factor, but it is a factor. This is really not debated much in the economics community, the general point is overall agreed: welfare increases the incentives for more children. This was one of the underpinning of former President Clinton’s welfare reform.

    What’s worse is that along with more single mothers, as the article I linked to above shows, cultures change and the acceptance of welfare increases…resulting in a positive feedback that only gets worse. This has been the experience in the United States, in Europe and where ever welfare has been tried – atleast in the long run.

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