Welfare and Work Participation of Single Mothers and Children’s Cognitive Development

The effects of single mothers’ welfare participation and work decisions on children’s outcomes are important. First, theories and empirical studies regarding the effects of mothers’ work on children’s attainments yield ambiguous findings. Second, participating in AFDC also exhibits a negative statistical relationship with the participating children’s possible outcomes of all sorts in the data. We develop a dynamic structural model of a single mother’s work and welfare participation decisions while their children are young. This model is used to measure the effects of mothers’ decisions on children’s attainments in the short run. Using NLSY79 children’s PIAT Math test scores as a measure of attainment, we find that single mother’s work and welfare use in the first five years of her child’s life both have positive effect on her child’s outcome, but this effect declines by the initial ability. The higher the potential ability of child, the lower the positive impact work and welfare have. In fact, in case of welfare the effect is negative if child has more than about median initial ability.. Furthermore, we find that work requirement reduces a single mother’s use of welfare. However, the net effect of work requirement on a child’s test score depends on whether mother’s work brings in enough labor income to compensate for the loss of welfare benefits. We also look at the implications of welfare eligibility time limit, child bonus, and maternal leave, on child’s outcome.