Is There an Effect of Incremental Welfare Benefits on Fertility Behavior? A Look at the Family Cap

A number of states have recently instituted family cap policies, under which women who conceive a child while receiving cash assistance are not entitled to additional cash benefits upon the birth of the child. This paper takes advantage of the variation across states in the timing of the policy's implementation to determine if family cap policies are discouraging women from having additional births. Vital statistics birth data for the years 1989 to 1998 offer no evidence that family cap policies lead to a reduction in births to women ages 15 to 34. The data reject a decline in births of more than one percent. The finding is robust to multiple specification checks. The data also reject large declines in higher-order births among demographic groups with relatively high welfare participation rates. Curiously, the data suggest increases in higher-order births to unmarried black and white high-school dropouts and to unmarried black teens approximately one year after the implementation of a family cap. The data reject a decline in births of more than four percent for unmarried white high-school graduates and unmarried white teens.