Transcript The Effect of Benefits on Single Motherhood in Europe

The Effect of Benefits on Single
Motherhood in Europe
Libertad González
Universitat Pompeu Fabra
May 2006
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Summary
• I estimate the effect of benefits available to single mother
households on the incidence of single mothers in Europe.
• I use ECHP data for 14 countries from 1994 through 2001.
• I try to establish causality by introducing country fixedeffects and year effects that vary by country or group of
countries.
• I find that there is a small but significant positive
association between benefit levels and the incidence of
both out-of-wedlock childbearing and divorce among
married mothers.
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Contribution
• The effect of benefits on single motherhood has been
studied before only in the context of a single country,
mostly the US and the UK.
• This is the first paper to analyze the impact of benefits
on the incidence of female-headed households in
Europe.
• The novelty of the approach comes from integrating
different countries into a common framework.
– Deriving identification from changes in benefits over time
and how they are followed by changes in the incidence of
single mothers.
– Accounting for unobserved variables at the country level and
unobserved changes over time.
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Outline
1. Motivation
2. Previous literature
3. Data and methodology
4. Results
5. Conclusion
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Motivation
• Dramatic increase in the prevalence of single
mother families in some Western countries (US,
UK) during the past 4 decades:
– From 8% of all families with children in 1960 to 24%
in 2002 in the US.
• Questions raised:
– What can explain these striking changes in family
structure?
– What are the consequences on the well-being of women
and children?
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Motivation (ii)
• Large literature on the effects of economic
variables on single motherhood trends in the US.
• What about other countries?
– Substantial cross-country variation in the prevalence of
single mothers and its evolution over time.
• Do economic variables play any role in explaining
this cross-country variation?
– Public assistance.
– Labor market conditions.
– Supply of marriageable men.
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Number of Single Mothers as % of All
Women, 1994-2001
8%
1994
2001
6%
5%
4%
3%
2%
1%
0%
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Outline
1. Motivation
2. Previous literature
3. Data and methodology
4. Results
5. Conclusion
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Theoretical Approach
• Becker’s work on the effect of economic variables
on fertility and partnership decisions.
• Assuming that these decisions are affected by the
expected costs and benefits of the different choices
available to the individual.
• The theory unambiguously predicts that higher
benefits available to single mothers would
increase the incidence of single motherhood.
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Literature on the Prevalence of
Single Mothers in the US
• Usual empirical strategy:
SM
ist
  0   1 B st   2 L st   3 x ict   ict
– OLS (Moffitt 2000), linear probability model
(Hoynes 1997), Probit model (Moffit 1994,
Blau et al. 2004).
– Time, state, MSA, and/or individual fixed
effects.
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Effect of Benefits
• Large literature on marriage and fertility
effects of welfare incentives for the US:
Hoynes (1997, JPubE),
Neal (2004, JHR),
Rosenzweig (1999, JPE),
Moffitt (1994, JHR; 2000, AER)
Blau, Kahn and Waldfogel (2004, JHR)
• Mixed results.
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Main Identification Problem
• It is hard to account for unobserved
variables that may be correlated with both
benefit levels and with the incidence of
single mothers.
• Such as social norms that may vary across
geographical regions and over time.
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Outline
1. Motivation
2. Previous literature
3. Data and methodology
4. Results
5. Conclusion
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Data and Methodology
• I use data from the European Community
Household Panel, for 14 countries, with yearly
observations from 1994 through 2001.
• I define a single mother as an unmarried woman,
not cohabiting with a partner, who lives with her
dependent children, at least one younger than 18.
• Age cut: 18 to 35.
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Sample Size
• I also define single heads as single mothers who
live by themselves with their children (not in coresidence with other relatives).
• The sample includes all women aged 18 to 35.
– Sample size is 172,437.
• The number os single mothers in the sample is
6,580 (3.8%), out of which 4,250 are single heads
(2.5%).
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Econometric Specification
P (Yict  1)   ( X ict   Z ct  )
• Logit model for the determinants of single
motherhood/headship (Y) for a woman i in country
c and year t.
• X is a vector of individual characteristics (age,
education).
• Z is a vector of country-specific factors.
• Country and year dummies.
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Benefit Measure
• The measure of “benefits” includes both
social assistance payments and familyrelated allowances.
• I measure the generosity of benefits in a
given country and year as the predicted
benefit level received by a “typical” single
mother household.
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Welfare Regimes
• Anglo-Saxon countries (UK, Ireland).
• Nordic countries (Denmark, Finland).
• Central-European countries (Austria, Germany,
France).
• Benelux countries (Belgium, Luxembourg, The
Netherlands).
• Southern European countries (Greece, Italy,
Portugal, Spain).
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Benefit Measure (ii)
• I estimate the following regression by
country for the sample of single mothers:
B ict   c  S ict  ct   ct   ict .
• Then I use the results to impute predicted
benefits for the “typical” single mother
(with 2 children, working 20 hours a week):
Bˆ ct  ˆ c  S ˆ ct  ˆ ct .
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Predicted Benefits Received by
Single Heads
6.8377.573
1994
7000
2001
6000
5.280
4.917
4.705 4.714
5000
4000
3000
4.084
3.857
3.750
3.478
3.331
3.470
3.388
3.193
3.049
3.014
2.707
2.508
2000
1.245
1000
49 9
204
661
361
858
445
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median benefits in euros
5.249
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Labor and Marriage Market Controls
• I include two reduced-form controls for
labor and marriage market conditions at the
country level:
– Male unemployment rates.
– Adult male (ages 25 to 54) median hourly
wage.
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Descriptive Statistics
Variable
Mean
Std. Dev.
Min
Max
Single heads
Single mothers
Age
High school
University
Male unemp.
Male wage
Benefits
0,025
0,038
26,65
0,41
0,24
6,81
6,73
2481
0,155
0,191
5,18
0,49
0,43
3,30
2,32
1984
0
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1,1
2,19
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35
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16,4
13,89
8458
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Single Heads as a % of All Women
18 to 35
0,12
1994
2001
0,08
0,06
0,04
0,02
0,00
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Outline
1. Motivation
2. Previous literature
3. Data and methodology
4. Results
5. Conclusion
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Coefficients Control Variables
Single mother
Single head
Age
2,305
(0,330)
0,058
***
3,463
(0,420)
0,040
***
Age squared
-0,075
(0,013)
-0,002
***
-0,112
(0,016)
-0,001
***
High school degree
-0,629
(0,044)
-0,015
***
-0,544
(0,044)
-0,006
***
University degree
-1,119
(0,052)
-0,022
***
-1,052
(0,049)
-0,010
***
Male unemp.
-0,015
(0,013)
0,000
.
-0,045
(0,015)
-0,001
***
Median adult male
wage
0,055
(0,039)
0,001
.
0,000
(0,034)
0,000
.
Country dummies?
Yes
Yes
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Benefits Coefficients
a) Cross Section
c) Year dummies
e) Country (grouped) and year dummies.
g) Country and year dummies
Single mother
Single head
0,2282
***
0,2550
***
(0,0344)
(0,0428)
0,00645
0,00355
0,2346
***
0,2562
(0,0348)
(0,0438)
0,00662
0,00357
0,0783
*
0,0411
(0,0404)
(0,0367)
0,00210
0,00049
0,0130
.
0,0317
(0,0223)
(0,0209)
0,00033
0,00038
***
.
.
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Time Effects by Country/Group
a) Group*year dummies
c) Country dummies, group*year dummies
d) Country dummies, group*trend
e) Country dummies*trend
Single mother
0,118
***
Single head
0,0663
*
(0,0390)
(0,0395)
0,00314
0,00079
0,025
0,0331
(0,0214)
(0,0206)
0,00063
0,00038
0,0118
0,0228
(0,0203)
0,0003
(0,0189)
0,00026
-0,0208
-0,0017
(0,0251)
-0,00052
(0,0246)
-0,00002
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Summary of Results
• In the cross-sectional analysis, we can see that the
countries with higher benefit levels are also those
with higher incidence of single mothers.
• Once we introduce year and country dummies, the
effects become smaller but remain significant in
some specifications (both for single mothers and
heads).
• The coefficients imply that a 1,000 euros increase
in benefits would result in a 2% increase in the
incidence of single mothers.
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Additional Specifications and
Robustness Checks
• Different age cuts for women.
• Only for low-educated women.
• Interaction between country and the individuallevel controls.
• Alternative measurement of benefits.
• Separate regressions for out-of-wedlock
childbearing and divorce.
• Individual fixed-effects.
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Outline
1. Motivation
2. Previous literature
3. Data and methodology
4. Results
5. Conclusion
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Conclusions
• The paper estimates the effect of benefit levels on
single motherhood in Europe.
• Using data from the ECHP for 14 countries, for
the period 1994-2001.
• I estimate reduced-form logit regressions where
the likelihood of a young woman being a single
mother (head) is a function of her individual
characteristics, labor and marriage market
conditions, and benefit levels.
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Conclusions (ii)
• Country fixed-effects account for unmeasured
(social, economic) factors at the country level that
may affect both benefits and the prevalence of
single mothers.
• Year dummies account for unmeasured factors that
evolve over time in all countries.
• I also interact the year effects with dummies for
individual or grouped countries, in order to
account for changes in unobserved variables at the
country level that may cause changes in both
benefits and single motherhood.
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Conclusions (iii)
• I find a positive and significant (but small)
association between benefits received by single
mothers and the incidence of these families.
• An increase in benefits of 1,000 euros a year
would result in about a 2% increase in the
prevalence of single mothers.
• The results provide some evidence that fertility,
partnership and co-residence decisions are affected
by economic incentives.
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Some Caveats
• Better measures of labor and marriage market
conditions.
• The reduced-form specification limits the
interpretation of the results.
– Overall generosity vs. targeting of the welfare system.
– Different incentives for out-of-wedlock childbearing vs.
separation or divorce.
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Questions, comments?
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