The Effects of Single Mothers' Welfare Participation and Work Decisions on Children's Attainments
In this paper, we examine the effects of single mothers' welfare use and employment decisions on children's short-run cognitive development, measured by their pre-school standardized math test scores. We control for three potential channels through which a mother's decisions affect her child's outcomes: direct monetary benefits, parental time invested on the child and non-pecuniary benefits from in-kind transfer programs such as Medicaid. We allow mothers' decisions to have varying effects on attainment by the children's innate ability. We employ an instrumental variables approach as well as state fixed effects to address the endogenous nature of welfare and labor market participation decisions. Our estimates suggest that an additional quarter on welfare during childhood results in a 1.4 percent increase in test scores for the average child. However, even though the affects on the average child are positive, welfare use and employment of the mother during childhood are detrimental to math skill accumulation if the child has higher than median innate ability. That is, children who were born to mothers with more years of schooling and higher AFQT scores are negatively affected by their mother's work and welfare use.
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