La responsabilidad, reducción a los deberes y derechos de ley

To explicate the findings, I start with the first-stage models as they are the key to any causal link between welfare reform, low-skilled single mother LFP, and young, low-skilled male labor supply. In Table 3, the middle column for each set of regression models contains the coefficients for the first stage models which estimate LFP rates for low-skilled single mothers aged 16 to 44. For the sake of clarity, I offer some brief commentary on the reported findings for a solitary case: all single males.

As displayed by the first-stage coefficients for all young, low-skilled single males in Table 3, a large portion of the within-state variation in labor supply by low-skilled single mothers, approximately 59%, can be explained by the first-stage models. Given that marginal effects are derived from several variables and my goal is simply to get one coefficient correct – the impact of the plausibly exogenous increase in LFP rates for low-skilled single mothers on the labor supply decisions of single, less-educated males – I bypass an interpretation of individual coefficients and comment on groups of covariates.19 As displayed, variations in policies implemented under the state-level waiver programs appear to explain a significant share of the variation in female LFP during their period of enactment, all else equal. Moreover, the trio of Welfare Reform (Waiver or TANF), Max Cash Benefits to Max EITC credit, and Cash Benefits

19 _{Note that the natural log has been applied to several control variables. This helps to account for any potential}

X Welfare Reform are all highly statistically significant and add a large amount of explanatory power to the model.

In terms of the strength and exogeneity of the instruments proposed in this analysis, the F-statistic for the identifying instruments is 12.76, which is above the empiricist minimum of 10 required to pass the weak instruments test (Angrist and Pischke 2009). Furthermore, I can formally test the exogeneity of the instruments since my model is over-identified. As shown, the Hansen J-Statistic indicates that one cannot reject the null hypothesis that the identifying

instruments are exogenous at the 5% level of statistical significance.20 Thus, the two crucial components required to perform an instrumental variable analysis – the relevance criteria and the exclusion restrictions – are met in this analysis.

Turning to the other models in Table 3, the mediated impact of welfare reform on the LFP rates for less-educated males aged 16 to 29 are presented for three groups of men: (1) all single males, (2) black single males, and (3) white single males. I begin with the single equation OLS coefficient, which indicates a positive and significant relationship between LFP rates for single mothers (16-44) and all single males (16-29). As noted, this estimate is biased. Two-stage modeling shown in the third column reveals a negative and statistically significant relationship. The coefficient of -0.2567 can be interpreted as follows: an exogenous 10 percentage point increase in LFP of low-skilled single mothers prompted by welfare reform policies led to an approximately 2.6 percentage point decline in labor supply by young, low-skilled single male laborers. Note that the sign of the estimated relationship has changed from positive to negative as

20 _{This test reveals that the instruments in this analysis do not directly influence male labor supply, but that the}

impact is moderated through their influence on female LFP. In other words, they meet the exclusion restriction of a valid instrumental variable. This finding is critical to establish a valid IV research design and, as will be shown, is not typically found in the modeling with other groups.

the IV strategy addresses the endogeneity concerns highlighted earlier by removing a significant portion of the bias inherent within OLS estimation.

Examining the LFP rates for young, low-skilled black males reveals a different picture. Though the models also pass the weak instruments and exogeneity tests, the estimated effect of increases in labor supply by single mothers is statistically indistinguishable from zero. While somewhat surprising, these findings are in line with Holzer et al. (2005) who attribute the decline in LFP to factors other than welfare reform and increases in low-skilled female labor supply. More specifically, the authors find that CSE and incarceration rates drive a large portion of the drop in the labor supply of black men between the ages of 16 and 34. While the research design and data panel length used in this analysis do not seek to reproduce these findings,21 it is simply important to note that black males within the period of welfare reform appear to be unresponsive to the influx of labor supplied by low-skilled single mothers.

The last group – single white males – is the group that is driving the findings of labor force exit for low-skilled men. As displayed, the estimated relationship between labor supply by single mothers and young, single white males is negative and statistically significant in the 2SLS modeling and, moreover, the point estimate indicates that a 10 percentage point increase in LFP rates by low-skilled single mothers led to approximately a 3.5 percentage point decline in LFP rates by young, low-skilled single males, holding all else equal. These values are both highly statistically and economically significant as this decline over a base LFP rate for white males of 87.6 pp can also be interpreted as a 4% decline in labor supply. In terms of the roughly 4 million young, low-skilled, single white males aged 16 to 29 in the March 2002 CPS, this represents a decline in supply of roughly 140,000 young men.