Academic journal article Atlantic Economic Journal

Premarital Birth among Young Hispanic Women: Evidence from Semiparametric Competing Risks Analysis

Academic journal article Atlantic Economic Journal

Premarital Birth among Young Hispanic Women: Evidence from Semiparametric Competing Risks Analysis

Article excerpt

Introduction

The Aid to Families with Dependent Children (AFDC) program [replaced by Temporary Assistance for Needy Families (TANF)] was often blamed for increasing illegitimate births, declining marriage, and rising divorce. The main argument was, by favoring single-parent families, the AFDC welfare system reduced the costs of having children and increased the value of single parenthood as an alternative to marriage.

Between 1990 and 1999, the proportion of minority welfare families increased from 60% to just over 67% and the Hispanic welfare population grew from 17% to 25% (U.S. Department of Health and Human Services 2005). However, the existing literature on welfare's effects on marriage and fertility has largely focused on groups of white and black women. In a review of 112 studies on the subject, Moffitt (1998) refers to Hispanic only twice in relation to the papers by Plotnick (1990) and Lichter et al. (1997). Plotnick (1990) uses National Longitudinal Survey of Youth (NLSY) data to analyze the link between welfare and teenage out-of-wedlock childbearing using a simple logit hazard framework. He does not find a strong link. His analysis does not allow for state fixed effects or unobserved heterogeneity and marriage is treated as random censoring. Schultz (1994) uses data from the 1980 U.S. Census to analyze probit equations on the effect of welfare on the "Probability of a Woman Living with a Spouse," and Tobit and OLS equations to analyze the effects of welfare on the number of children born. He considers blacks and whites and three age groups. He finds that AFDC generosity has a negative, statistically significant, effect on marriage for the 14 to 24 age group. The effect of AFDC on fertility is negative and statistically significant only for whites ages 14 to 24. He does not consider state fixed effects. Hoynes (1997) uses data from the Panel Study of Income Dynamics (PSID) to study the effect of welfare generosity on the probability of female headship. She finds no significant effect of welfare for white women; for black women the effect became insignificant after controlling for individual unobserved heterogeneity.

Lichter et al. (1997) consider the impact of welfare on the percentage of female-headed families. They find welfare only has a small impact. Their analysis blends different sources of female headship (premarital birth, divorce, etc.) and considers race dummies as explanatory variables.

Rosenzweig (1999) uses NLSY data to study the effect of welfare on the probability of a woman having a premarital birth versus only marital births or no births by age 22. After controlling for state fixed effects and cohort fixed effects, he finds a significant and quantitatively large positive effect of welfare on the probability of premarital fertility, especially among low income women. Because his analysis is only concerned with the status quo at a specific age, it cannot distinguish between the hypothesis that the increase in premarital birth is the result of a direct effect of welfare on teen fertility, and the hypothesis that welfare reduces the likelihood of marriage. Any one of these effects can increase premarital births.

In a recent paper, Keane and Wolpin (2007) structurally estimate a dynamic programming model of life-cycle decisions of young black, Hispanic and white women. They account for a number of labor and marriage market outcomes, but do not focus on premarital birth. While TANF was substituted for AFDC, the relative simplicity of the old welfare program provides a unique opportunity to analyze the effects of economic incentives on marriage and fertility behavior. (1)

In this paper, we analyze the effects of the AFDC welfare generosity on a sample of young Hispanic women's premarital fertility and marriage choices from the NLSY data. A bivariate competing risks duration model framework allows us to identify a young women's premarital fertility and marriage choices. …

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