Why is the rate of single-parenthood lower in Canada than in the U.S.? A dynamic equilibrium analysis of welfare policies

Nezih Guner and John Knowles

Canadian Journal of Economics, 2009, vol. 42, issue 1, 56-89

Abstract: A critical question in the design of welfare policies is whether to target aid according to household composition, as was done in the U.S. under the Aid to Families with Dependent Children (AFDC) program, or to rely exclusively on means-testing, as in Canada. Restricting aid to single mothers, for instance, has the potential to distort behaviour along three demographic margins: marriage, fertility, and divorce. We contrast the Canadian and the U.S. policies within an equilibrium model of household formation and human capital investment on children. Policy differences we consider are eligibility, dependence of transfers on the number of children, and generosity of transfers. Our simulations indicate that the policy differences can account for the higher rate of single-parenthood in the U.S. They also show that Canadian welfare policy is more effective for fostering human capital accumulation among children from poor families. Interestingly, a majority of agents in our benchmark economy prefers a welfare system that targets single mothers (as the U.S. system does), yet (unlike the U.S. system) does not make transfers dependent on the number of children.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://doi.org/10.1111/j.1540-5982.2008.01499.x (text/html)
access restricted to subscribers

Related works:
Journal Article: Why is the rate of single‐parenthood lower in Canada than in the U.S.? A dynamic equilibrium analysis of welfare policies (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:42:y:2009:i:1:p:56-89

Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php

Access Statistics for this article

Canadian Journal of Economics is currently edited by Zhiqi Chen

More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().