Welfare and the well-being of children.

• Author: Currie, Janet
• Position: Research Summaries

There is broad public consensus that welfare programs should benefit poor children. Yet we know remarkably little about whether they actually do. Most research on welfare programs, as well as much of the debate about welfare reform, has focused on the way that parents respond to the incentives created by the system, rather than on the effects of these programs on children. My recent research begins to fill this gap.

The fundamental question is whether any of these programs benefit children. If it can be shown that they do, a second question is: which types of programs are most effective? For example, do cash or in-kind programs produce bigger benefits for children? Finally, do welfare programs have differential effects on different groups, and if so, why?

Cash Versus In-Kind?

The oldest and most important program providing cash benefits to single mothers with children is Aid to Families with Dependent Children (AFDC). This program has been attacked by critics who argue that participation in AFDC promotes maternal behaviors that are bad for children. Nancy Cole and I investigated this claim, using the birthweight of infants born to mothers who participated in AFDC during pregnancy as a marker for child well-being.(1) We found that AFDC mothers were indeed more likely to delay obtaining prenatal care, to smoke, to drink, and ultimately to have low-birthweight babies than other mothers. However, when we used either fixed effects or instrumental variables methods to control for unobserved as well as observed characteristics of the mothers, we found that there was no statistically significant association between birthweight and participation. Thus, AFDC does not seem to induce negative behaviors associated with low birthweight; however, conditional on income, participation in the program does not improve birth outcomes either.

I address the larger question of whether increases in income per se improve child outcomes in a study with Duncan Thomas. We show that maternal income is related significantly to children's test scores, which in turn are significant predictors of schooling attainment, even after controlling for maternal test scores.(2) However, analysis of individual maternal achievement tests shows that those skills that are most highly rewarded in the labor market are not always the same skills that are associated with improved child outcomes.

Finally, in two studies I show that although the available evidence is incomplete, it suggests that in-kind programs that target benefits directly to children have much larger measurable effects on specific outcomes than do equivalent cash transfers.(3) Thus, if the public has in mind that there are certain specific services such as basic medical care and high-quality childcare that every child should receive, then in-kind programs designed to provide those services are likely to be more cost-effective than traditional income support programs. This finding provides an economic rationale for the fact that over the past 20 years an increasing proportion of...