AFDC Benefits and Nonmarital Births to Young Women

Following recent work by Rosenzweig (1999), this paper reexamines the effect of Aid to Families with Dependent Children (AFDC) benefits on nonmarital childbearing through age 22. Unlike most previous work, Rosenzweig finds a statistically significant and quantitatively large positive AFDC effect. Using data from the Panel Study of Income Dynamics, we replicate his analysis and explore the reasons his findings differ from earlier research findings. We are able to reproduce his main finding in a model that includes state and cohort fixed-effects; we find that control for state effects increases the estimated AFDC effect. When we examine fertility separately by age, we find no AFDC effect on teen non-marital births, but a large effect on the behavior of women in their early 20s.