The Price Effects of Family Caps on Fertility Decisions of Poor Women

Abstract

Family Caps have been a popular welfare reform policy designed to discourage women on welfare from bearing additional children. It has been thought that the principal mechanism through which a Cap achieves its objective of lower birth rates is the financial pressure placed on women by the denial of cash benefits. Our study uses instrumental variables Probit modeling to directly measure the contribution that price makes to Cap impact on births. We reexamine data from the New Jersey Family Development Program (n = 8,393) experiment and find that only a very small percentage (about 2.5%) of the overall Family Cap effect reported in earlier studies can be attributed to price. Moreover, the price effect holds only for short-term Black welfare recipients. We speculate that much of the unexplained Family Cap treatment effect stems from a message of social pressure and disapproval toward welfare receipt and childbearing on welfare. We offer a possible direction for future research which would directly measure the social disapproval component.

Can Policies Stall the Fertility Fall? A Systematic Review of the (Quasi‐) Experimental Literature

“…66There is also supporting evidence that the anti‐natalist message that accompanied welfare cutbacks reduced fertility in itself (Jagannathan et al. 2010). …”

Universal Transfers, Tax Breaks and Fertility: Evidence from a Regional Reform in Norway

“…Comparable reforms in other countries were implemented with the explicit aim of increasing fertility (Cohen et al, 2013 ; Milligan, 2005 ). When such intentions are explicit, effects on fertility can be mediated by norms and values, above and beyond economic circumstances (Jagannathan et al, 2010 ). Given that the aim for this reform was to impact internal migration, rather than to affect fertility, changes in norms and values are less likely as mediators.…”

“…Of relevance for our study, these negative effects tend to be linked to an increase in female labor supply. However, in the context of US welfare programs, there is also a strong normative aspect in policy implementation, discouraging childbearing while on welfare, which could also contribute to negative effects (Jagannathan et al, 2010 ). The absence of such normative components in our reform suggests a less negative impact of tax breaks in our study than previously found.…”

Causal Analysis of Policy Effects on Fertility

“…On one hand, a pro-natalist intent could amplify the effect, as it conveys that childbearing is valued and supported. For retraction of welfare benefits, there is some evidence that the normative message to reduce childbearing while on benefits affects fertility in its own right (Jagannathan et al 2010). On the other hand, explicit pro-natalist intent has been controversial in liberal democracies, and such intent could also backfire and mute policy effects (Botev 2015).…”