The Incentive Effects of Cash Transfers to the Poor

Abstract

All redistributive and social insurance programs trade off the potential benefits of transfers with the disincentives these programs generate. We investigate this trade-off using newly collected lifetime data for 16,000 women who applied to the Mothers' Pension Program, the first cash transfer program in the US. In the short-run cash transfers reduced geographic mobility and delayed marriage of recipients but did not affect who they married or where they moved to. In the long run transfers had no effect on work, marriage or fertility behaviors. They also did not improve the economic conditions of recipients or their longevity.

Education and income gradients in longevity: The role of policy

“…Golosov et al (2021) find that lottery winners who are single are more likely to marry, and marriage is associated with longer lives. But in the case of welfare mothers, Aizer et al (2020) find that women who received transfers delayed getting remarried, as expected because women would lose the transfer upon remarriage. This suggests that how the money is obtained matters : when money is earned, when it is unexpectedly won or when it is given conditional on certain behaviours or conditions, it has different effects on the recipients.…”

“…It might also be that there are more mechanisms through which income improves the health of children: more income might result in more education for children, for example, whereas the same is not true for adults. Indeed, Aizer et al (2016) find that sons of recipients also obtained more education and had greater incomes, whereas Aizer et al (2020) find that, in the long run, the economic circumstances of their mothers were unchanged.…”

“…Consider the studies by Aizer et al (2016Aizer et al ( , 2020. They study the effects of cash transfers to poor families in the early 20th century, the Mothers' Pensions program, the first welfare program in the United States upon which the current welfare program was based.…”

Partisan Fertility and Presidential Elections

“…3 Our paper relates to a broader literature on the economic determinants of fertility, including unemployment, income, housing prices, coal busts, fracking booms, Medicaid eligibility, COVID-19, cash transfers, and child subsidies (Aizer et al, 2020, Autor et al, 2019, Black et al, 2013, Buckles et al, 2021, Cohen et al, 2013, Currie and Schwandt, 2014, Dettling and Kearney, 2014, Duncan et al, 2017, Kearney and Levine, 2009, 2021, Lindo, 2010, Lovenheim and Mumford, 2013, McCrary and Royer, 2011, Raute, 2019, Schaller, 2016.…”

Partisan Fertility and Presidential Elections

“…4 As an alternative outcome, we find supporting evidence using Google search data for "pregnancy test." 5 Our paper relates to a broader literature on the economic determinants of fertility, including unemployment, income, housing prices, coal busts, fracking booms, Medicaid eligibility, COVID-19, cash transfers, and child subsidies (Currie and Schwandt, 2014, Buckles et al, 2021, Autor et al, 2019, Cohen et al, 2013, Schaller, 2016, Dettling and Kearney, 2014, Kearney and Levine, 2009, 2021, Lindo, 2010, Lovenheim and Mumford, 2013, Black et al, 2013, Aizer et al, 2020, McCrary and Royer, 2011, Raute, 2019, Duncan et al, 2017.…”