La responsabilidad: reducción al valor económico

In this section, I present three additional robustness checks to examine the sensitivity of my findings. The first check is to introduce state-level time trends to the core models previously reported in Table 3. These specifications seek to account for time-variant omitted factors within a state which could either increase or decrease the propensity for LFP by low-skilled female and male workers. Table 4 contains the findings from this exercise. As displayed, the introduction of time trends diminishes the statistical significance of estimated decline in LFP rates for all single males aged 16 to 29. While the point estimates is still negative, the coefficients are not

statistically significant at any conventional levels and the F-statistic on excluded instruments is well below the empiricist minimum of 10 to avoid the weak instruments critique. However, conclusions for the two subgroups of young males are similar to those reported in other tables. I find no evidence of labor supply changes for blacks, but statistically and economically

significant labor force exit for young white males. Under this robustness check, the magnitude of the findings are very similar to those previously presented: I estimate an approximately 3.2 pp decline in labor supply for each 10 pp increase in LFP for single mothers.

Though not strongly supportive at the aggregated level, the results from the models with time trends do provide additional evidence for causal claims for the group which appears to be driving the finding of labor force exit: young, single white males. However, modeling with state- specific time trends in this analysis can be criticized on three grounds: (1) the majority of the data used to calculate the time trend resides in the post period and this distorts the inferences and value of establishing a “pre” trend because it is based primarily upon “post” data, (2) the margin with which labor supply decisions are changing is relatively small and, consequently, the use of a time trend does not leave much variation to be explained by other mechanisms, and (3) data at

the aggregate level – recall Figure 1 – indicate a rather quick transition of LFP rates for young males during the welfare reform period then a subsequent stabilization. Stated differently, time trends may be too blunt of an instrument which absorbs much of the variation in LFP, which is directly attributable to welfare reform policies, especially given that the models already contain state, year, and quarter fixed effects. This statement is particularly true when thinking about the interpretation of the first stage tests for weak instruments. Given these critiques, coefficients derived from core models provide a more precise measurement of labor force exit stemming from an exogenous shift in low-skilled female labor supply.

The second set of robustness checks examines whether a similar subset of men who could have been affected by large increases in labor supply by low-skilled single mothers. As presented in Table 5, low-skilled single males aged 30 to 49 do not appear to be negatively impacted by the labor supply increases of single mothers aged 16-44. While eschewing a detailed analysis of these findings due to space constraints, I will simply make a few comments to explain the difference in patterns among the younger and older low-skilled male workers. Younger males may be more responsive to market conditions because they have less work history, labor force attachments, and are more likely to engage in criminal activity (Freeman 2000; Levitt 2001). Thus, they would be more influenced by changes in female labor supply, whereas many older males are ostensibly in the legitimate labor force, or not, a tendency which changed very little during the welfare reform years or are competing for positions unaffected by the influx of low- skilled female labor. Stated differently, the labor supply decision of older males appears to be operating at a different margin which is not negatively impacted by the increase in labor supply by low-skilled women stemming from welfare reform.

Finally, Table 6 contains a series of other robustness check where I apply the FE-IV strategy used in this paper to two overlapping childless groups which should not have been directly impacted by welfare reform under the theoretical framework established earlier: young, low-skilled single females aged 16 to 29 without children and low-skilled single women aged 16 to 44, again without children. When examining the responsiveness of single, childless women of each age group using the LFP responsiveness of single mothers aged 16-44 as the first-stage instrumented variable (i.e., equivalent to the second-stage model reported in Table 3), there is no evidence of labor force exit stemming from welfare reform.

Results from these robustness checks present strong evidence that the indirect effects of welfare reform were targeted specifically on low-skilled male – not female – workers. This important differentiation reveals that young, low-skilled males may be more sensitive to monetary incentives offered by the marketplace – especially if they have more lucrative employment opportunities in the informal or black market.