PUBLIC WELFARE AND LIFE CYCLE DECISIONS OF YOUNG WOMEN

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This project studies relationship between public welfare eligibility criteria and benefit rules and the life cycle decisions of young women concerning schooling, marriage, fertility, work, and welfare participation. The life cycle decisions are treated as being made jointly under uncertainty in a sequential and forward looking manner and subject to economic and environmental constraints. Among the constraints are time-varying labor market and marriage market opportunities, and the behaviors of other family members, parents and spouses. The model is estimated using data from the female respondent's of the 1979 youth cohort of the National Longitudinal Surveys of Labor Market Experience. The structural estimates of the model are to be used to perform counterfactual policy experiments concerning the impact of public welfare rules on life cycle outcomes. Specifically, the alms of the project are: 1. To describe the life cycle schooling, marriage, fertility, labor supply, and public welfare participation patterns of women during their teens and twenties by race/ethnicity using longitudinal data. 2. To estimate a dynamic economic model of women's life cycle decisions in which schooling, marital status, fertility, labor supply and welfare program participation are treated jointly as components of the choice set. 3. To estimate the effect of welfare program eligibility criteria and benefit rules, marriage market opportunities, labor market opportunities, and family background on women's life cycle decisions regarding schooling, marriage, fertility, labor supply and welfare program participation. 4. To quantify the importance of alternative explanations, such as "poor" marriage market opportunities vs. the generosity of welfare programs, for the racial and ethnic differences observed in the schooling, marriage, fertility, labor supply, and welfare participation patterns of young women. 5. To estimate the impact of welfare program eligibility criteria and benefit rules on the aggregate levels of premarital childbearing, of female headed households, of women in poverty and of children born into poverty. 6. To estimate the effect of welfare program eligibility criteria and benefit rules on women's life cycle human capital accumulation and on women's wealth. 7. To estimate the extent to which public welfare creates, through its effect on life cycle decision making concerning schooling, marriage, fertility, and work, a permanent welfare- dependent subgroup of women.