We estimate the effect of welfare reform on the intergenerational transmission of welfare participation using a long panel of mother-daughter pairs over the survey period 1968-2013 in the Panel Study of Income Dynamics. Because states implemented welfare reform at different times starting in 1992, the cross-state variation over time permits us to quasi-experimentally separate out the effect of mothers’ participation on daughters’ welfare choice in the pre- and post-welfare reform periods. Our empirical framework also addresses potential issues in identifying a causal pathway from parent to child that arise from correlated unobservables in welfare decisions, misclassification error in survey reports, life-cycle differences in measuring the parent and child’s age of welfare usage, and cross-state mobility. We find that a mother’s welfare participation increased her daughter’s odds of participation as an adult by around 25 to 35 percentage points, but that welfare reform attenuated this transmission by at least 50 percent, or at least 30 percent over the baseline odds of participation. However, when we broaden the definition of welfare received by the daughter to also include assistance from means-tested food or disability assistance, then the transmission from mother to daughter does not decrease after welfare reform. This seems to be a consequence of persistence in intergenerational poverty status.
Discussion Paper Number
Hartley, Robert Paul; Lamarche, Carlos; and Ziliak, James P., "Welfare Reform and the Intergenerational Transmission of Dependence" (2016). University of Kentucky Center for Poverty Research Discussion Paper Series. 121.