Welfare Reforms and the Living Standards of Single Mothers: Evidence from Canadian Provinces

This paper evaluates the impact of the 1995-1998 Ontario welfare reforms on the standard of living among single mothers. I look at how different measures of single mothers’ consumption vary in response to transfer income shocks. Because welfare is a provincial responsibility in Canada, this study is able to consider the effects of the welfare reforms in Ontario, in comparison with other Canadian jurisdictions at the same time. By utilizing a ‘difference in difference’ natural experiment design I compare the changes in the standard of living of Ontario single mothers to changes in the standards of living of three distinct control groups. The comparison with control groups under different provincial administrations and the implementation of propensity score matching estimates sets my approach apart from previous similar work. The results indicate an initial decrease in the relative standard of living of Ontario single mothers. The immediate policy impact has been largely reversed with the complete implementation of welfare reforms and the introduction of National Child Benefit program. I find that the traditional regression approach overestimates the immediate negative effects of policy changes and underestimates the subsequent recovery. I find that the results are sensitive to the choice of control group; the inclusion of geographically different control groups adds significant insight to the analysis.