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


Guner, Nezih and Knowles, John (2009) Why is the rate of single parenthood lower in Canada than in the U.S.? A dynamic equilibrium analysis of welfare policies. Canadian Journal of Economics, 42, (1), 59-89. (doi:10.1111/j.1540-5982.2008.01499.x).

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Description/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 behavior 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 does not (unlike the U.S. system) make transfers dependent on the number of children.

Item Type: Article
ISSNs: 0008-4085 (print)
Related URLs:
Subjects: H Social Sciences > HQ The family. Marriage. Woman
H Social Sciences > HV Social pathology. Social and public welfare
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 55068
Date Deposited: 05 Aug 2008
Last Modified: 27 Mar 2014 18:37
URI: http://eprints.soton.ac.uk/id/eprint/55068

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