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The article provides a bridge between recent marriage market research and studies of welfare incentive effects on U.S. family formation. Estimates from state and county fixed‐effects models indicate significant effects of changing state Aid to Families with Dependent Children, food stamps, and Medicaid expenditure levels on county‐level changes in families headed by unmarried mothers. However, neither changing welfare benefit levels nor declining economic and marital opportunities could account for recent increases in female headship. The results imply that large additional cuts in welfare payment levels would lead to only small reductions in the percentage of female‐headed families with children.
Lichter et al. (1997) studied this question.