Single Mothers' Living Arrangements: The Effect of Household Composition on AFDC Participation

Rebecca A. London

IPR working papers from Institute for Policy Resarch at Northwestern University

Abstract: This paper examines the determinants of single mothersÕ living arrangements and their effect on mothersÕ AFDC participation. Using data from the 1990 Survey of Income and Program Participation, I estimate a two-stage instrumental variables model to account for the simultaneity of the living arrangement and AFDC participation decisions. Tabulations show that 62 percent of single mothers live independently, 16 percent live in the home of their parents, 12 percent cohabit with an unrelated man, and 11 percent share with others. High AFDC plus Food Stamp benefits increase the propensity of mothers to cohabit, and decrease their probability of living with parents or sharing with others, relative to living independently. Higher benefits also increase the probability of AFDC receipt. However, the resulting rise in the AFDC participation rate is not as pronounced once the policyÕs simultaneous effect on the distribution of living arrangements is taken into account. In addition, increasing the restrictiveness of state policies regarding co-residentsÕ contributions to shelter and household expenses has effects on both the distribution of living arrangements and the AFDC participation rate. Again, simulations show that the effects on AFDC participation are mediated by the shift in the distribution of living arrangements.

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Persistent link: https://EconPapers.repec.org/RePEc:wop:nwuipr:96-4

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