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WELFARE REFORM AND CHILDREN'S EARLY COGNITIVE DEVELOPMENT
Author(s) -
CHYI HAU,
OZTURK ORGUL DEMET,
ZHANG WEILONG
Publication year - 2014
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12042
Subject(s) - welfare , counterfactual thinking , economics , welfare reform , incentive , work (physics) , labour economics , cognition , cognitive skill , population , demographic economics , public economics , psychology , medicine , microeconomics , social psychology , environmental health , neuroscience , market economy , mechanical engineering , engineering
In this paper, we use a dynamic structural model to measure the effects of (1) single mothers' work and welfare use decisions and (2) welfare reform initiatives on the early cognitive development of the children of the NLSY79 mothers. We use PIAT‐Math scores as a measure of attainment and show that both the mothers' work and welfare use benefit children on average. Our simulation of a policy that combines a time limit with work requirement reduces the use of welfare and increases employment significantly. These changes in turn significantly increase children's cognitive attainment. This implies that the welfare reform was not only successful in achieving its stated goals, but was also beneficial to welfare children's outcomes. In another policy simulation, we show that increasing work incentives for welfare population by exempting labor income from welfare tax can be a very successful policy with some additional benefits for children's outcomes. Finally, a counterfactual with an extended maternal leave policy significantly reduces employment and has negative, though economically insignificant, impact on cognitive outcomes . ( JEL I38, J22, J18)