Th` Dyn`m~` and In",g~

318
IV f Genepating Inequality
Th'
Dyn'm~' In",g~
and
permanently poor to P~
agendas, both group~
downplayed the eX1~
poverty at one point or .
Two factors have co ..
vatives' emphasis at tim~
nature of poverty. The ~
the openness of society. ~
that markets lead to a. l
among social and econonW
argued that there is. COl
acrosS the income dlstr~
that for many families ~
nent status. Second is the
measures of yearly.pover1
ate the amount of pover\:1
defects of annual income
distribution of well-beil
offsetting changes in inCl
Milton Friedman makes
fully by asking us to C(
that have the same disa:
come: "In one there it
change so that the pos~ti
lies in the income hie
from year to year. In tb
rigidity, each family sta1
year after year. Clear!
sense, the second one 'I
equal society" (1962,
this view, we should b
the distribution of lifeti
of the poor in one year
lowing year, then the
poor, are a small subse
year. 2
Liberals have also a
existence of permane
two somewhat diffen
belief that income is
factors outside the c<
such as the health of I
to stress the transitor
welfare reci piency. 1
times. During these b
tunate fall into povel
ticipate in governrn
conditions may chal
exits from both pove
Ii1
PETER GOTTSCHALK, SARA
AND GARY D. SANDEFUR
MCLANAHAN,
The Dynamics and Intergenerational
Transmission ofPoverty and
Welfare Parlicipation
The traditional approach to the measurement
of poverty has been to examine the size and
composition of the poverty population by an­
alyzing cross-sectional data <:'1) yearly income.
Yet a good part of the poverty policy debate
focuses on issues that cannot be addressed
with data on yearly income. There is substan­
tial interest, for example, in long-term
poverty or the welfare dependence of a single
generation and the links between the out­
comes of parents and their children. Statistics
on who is poor (or who receives welfare) dur­
ing a single year provide no information on
the total number of years that individuals and
families are poor (or receiving welfare). Nor
do they tell us if today's poor (or' welfare re­
cipients) grew up in households that were
poor or received public assistance. Here we
examine the recent empirical research on
poverty and welfare dynamics and the emerg­
ing research on the links between generations.
The vision of a permanently dependent un­
derclass, mired in poverty and dependency,
gained considerable attention during the
1980s. Conservative analysts such as Charles
Murray (1984) argued that a "welfare trap"
robbed recipients of the will to better their
Originally published in 1994. Please see complete
source information beginning on page 891.
lot. Welfare offered the opportunity to drop
out of the labor market and to abandon the
traditional family model by making it possible
to raise children while unemployed and un­
married. Furthermore, the resulting debilitat­
ing effects of welfare were asserted to be
passed on to successive generations. Accord­
ing to this view, welfare programs were a
cause of the problem, rather than part of the
solution to poverty. The way to save people
from long-term poverty and dependence was
to scale back the welfare system.
Ironically, the notion that people were
trapped in long-term poverty was one of the
motivations for the War on Poverty. Drawing
on the work of Oscar Lewis (1961) and
Michael Harrington (1962), liberals used the
idea of an intergenerational poverty to galva­
nize public support for the creation of work
and training programs for youth. These pro­
grams promised to reunite the poor with the
rest of society. In effect, the War on Poverty
was waged on behalf of the children of the
poor, who were assumed to be trapped by
poverty rather than by welfare. According to
this view, welfare provided the transitional fi­
nancial support necessary to allow the poor
to gain the skills to become self-sufficient.
That the specter of a permanently poor
class has been used to justify both the creation
and the dismantling of social programs is in­
dicative of the controversy surrounding these
issues. Moreover, just as both liberals and
conservatives have used the existence of the
IV I Gelleratlll Inelluallty
opportunity to drop
and to abandon the
by making it possible
memployed and un­
Ie resulting debilitat­
",ere asserted to be
senerations. Accord­
'e programs were a
ther than part of the
way to save people
llld dependence was
system.
I that people were
'erty was one of the
:m Poverty. Drawing
Lewis (1961) and
;2), liberals used the
lal poverty to galva­
he creation of work
'r youth. These pro­
e the poor with the
the War on Povertv
the children of th~
1 to be trapped by
elfare. According to
d the transitional fi­
T to allow the poor
.e self-sufficient.
permanently poor
.fy both the creation
cial programs is in­
r surrounding these
both liberals and
he existence of the
The Dyn,lmics and Intergenerational Transmission of Poverty and Welfare Participation
permanently poor to promote their policy
agendas, both groups have also denied or
downplayed the existence of permanent
poverty at one point or another.
Two factors have contributed to the conser­
vatives' emphasis at times on the transitory
nature of poverty. The first is their belief in
the openness of society. Sensitive to criticisms
that markets lead to a rigid class division
among social and economic classes, they have
argued that there is considerable mobility
across the income distribution and, hence,
that for many families poverty is not a perma­
nent status. Second is their belief that official
measures of yearly poverty seriously exagger­
ate the amount of poverty. One of the primary
defects of anImal income as a measure of the
distribution of well-being is that it ignores
.offsetting changes in incomes in other years. 1
Milton Friedman makes the case most force­
fully by asking us to consider two societies
that have the same distribution of annual in­
come: "In one there is great mobility and
change so that the position of particular fami­
lies in the income hierarchy varies widely
from year to year. In the other, there is great
rigidity, each family stays in the same position
year after year. Clearly, in any meaningful
sense, the second one would be the more un­
equal society" (1962, p. 171). According to
this view, we should be most concerned with
the distribution of lifetime well-being. If many
of the poor in one year are not poor in the fol­
lowing year, then the truly needy, or truly
poor, are a small subset of the poor in a single
year. 2
Liberals have also at times downplayed the
existence of permanent poverty, though for
two somewhat different reasons. First, their
belief that income is largely determined by
factors outside the control of the individual,
such as the health of the economy, leads them
to stress the transitory nature of poverty and
welfare recipiency. Families fall upon hard
times. During these bleak periods the less for­
tunate fall into poverty and may need to par­
ticipate in government programs. Outside
conditions may change, however, leading to
exits from both poverty and welfare.
878
Second, liberals are also reluctant to em­
brace the notion of an underclass because of
their experience with the debate over the
"culture of poverty" in the late 1960s. Al­
though the concept of a dysfunctional cul­
ture was originally proposed as a critique of
capitalism, the culture of poverty argument
soon came to be viewed as "blaming the vic­
tims" for conditions bevond their control.
According to this view, it was not "the sys­
tern" but rather the poor's lack of will to
avoid the "welfare trap" that caused long­
term poverty) As black clients became an in­
creasing proportion of the welfare caseload,
this argument became open to charges of
racial bias. As a result, liberals backed off
from any discussion of long-term or inter­
generational poverty during the 1970s for
fear of being labeled racist or unsympathetic
to the poor.
That liberals and conservatives have such
different views on intragenerational and inter­
generational dynamics is due, in part, to their
very different models of the causes of long­
term poverty and the role of welfare in reduc­
ing or exacerbating poverty_ The causal expla­
nation, put forward by conservatives, is that
welfare programs create dependency and,
therefore, perpetuate poverty (Murray, 1984;
Mead, 1986). The availability of welfare en­
courages women to bear children out of wed­
lock, encourages families to break up, and
eliminates the need for absentee fathers to
contribute to the economic and social require­
ments of their children, thereby encouraging
long-term dependency. Furthermore, long­
term dependency is assumed to be passed
from one generation to the next.
For liberals, long-term poverty and welfare
participation have generally been explained in
terms of the lack of employment opportuni­
ties or the existence of jobs that do not pro­
vide earnings sufficient for a family to have a
minimally adequate standard of living (Har­
rington, 1962; Wilson and Neckerman,
1986). If employment opportunities continue
to be inadequate, then parents will not be able
to earn enough to support their children.
Poverty will continue, and in some cases, de­
380
pendency on welfare will also result from the
inadequate economic environment.
William Julius Wilson and Kathryn Necker­
man (1986) have further broadened the focus
to the connections between inadequate em­
ployment opportunities, family structure, and
poverty. They argue that the lack of employ­
ment opportunities, especially for black men,
has led to a lower rate of marriage and a
higher rate of out-of-wedlock childbearing
among black women. Inadequate employ­
ment opportunities thus produce poverty and
welfare dependence indirectly through effects
on family structure as well as directly through
reduced income.
From this brief review, we can see that con­
servatives are likely to view long-term poverty
as evidence of the dangers of welfare. At the
same time they stress that Amerjs:an society is
fairly open, so that many of the poor are only
temporarily poor. Liberals are likely to point
to the problems faced by the long-term poor
as a way of marshaling sympathy for the poor
and garnering support for government inter­
ventions to combat poverty, including policies
to improve market opportunities and to ex­
pand programs. At the same time, liberals
downplay any negative behavioral effects of
long-term welfare participation.
Who is correct in this debate is still a highly
contested issue. Part of the debate'rests on
logical arguments. Liberals argue that because
welfare is freely chosen by recipients, it can
hardly be called a "trap." Recipients obvi­
ously believe that welfare is the best of the
bad options they face. There is no logical ba­
sis for arguing that the mother herself would
freely choose welfare if it formed a "trap"
that she wished to avoid. Welfare provides a
steady, if meager, source of income, which
must be preferred to the option of working
and raising a family as a single parent or the
option of marrying the father, who may not
be able to support his children financially. Al­
though it is possible to argue that the children
or taxpayers are worse off when the mother
accepts assistance, it is not consistent to argue
that recipients make choices and that these
choices make them worse off.
IV I Genel'allnglnequalllJ
Similarly, conservatives argue that liberals
deny the inevitable work and marriage disin­
centives inherent in the welfare system. By
paying a mother more if she doesn't work and
doesn't marry, the welfare system discourages
mothers from following either of these so­
cially desirable activities. Because both mar­
riage and work lead to higher income, the
welfare system creates long-term poverty and
dependency. Therefore, according to conser­
vatives, the logical outcome of a more gener­
ous welfare system is to form a trap that locks
recipients into long-term poverty.
The relevant question, however, is not
whether a trap exists or whether there are dis­
incentives, for it is certainly true that some
families receive welfare for protracted periods
and that there are disincentives. The question
is the quantitative magnitude of these factors.
We approach this highly ideological debate by
examining two central issues: the prevalence
of long-term poverty and welfare participa­
tion and the disincentives caused by public as­
sistance; and the relationship between
poverty, income, and welfare use in one gen­
eration and the next.
The Dynamics and Intergener4
(Author'S tabulation of Pan!J
a. All races proportion 0.70
0.60
0.50
0040
0.30
0.20
II
I
1 year
Evidence on
Intragenerational Mobility
b. By race Dynamic issues have received less attention
than the static measures of poverty, in part be­
cause longitudinal data sets such as the Panel
Study of Income Dynamics (PSID) and the
National Longitudinal Survey of Youth
(NLSY) have been widely available only since
the late 1960s. These data sets only now have
enough years of data to study both long-term
poverty and welfare recipiency and to observe
the outcomes over multiple generations.
0.70
Income and Poverty Dynamics
We begin by documenting the extent to which
poverty is a permanent or transitory condi­
tion. Figure 1 presents data on the length of
poverty spells. This figure, based on data
from the Panel Study of Income Dynamics,
I.
I
Proportion 0.60
0.50
0040
0.30
0.20
0.10
0.00
1 year
2y~
IV I Generating Inequality
The Dynamics and Intergenerational Transmission of l'overty and Welfare Participation
argue that liberals
and marriage dis in­
welfare system. By
Ie doesn't work and
system discourages
either of these so­
Because both mar­
ligher income, the
?;-term poverty and
cording to conser­
e of a more gener­
'ill a trap that locks
)verty.
however, is not
ether there are dis­
tly true that Some
protracted periods
:ives. The question
Je of these factors.
~ological debate by
es: the prevalence
welfare participa­
LUsed by public as­
lonshi p between
re use in one gen­
FIGURE 1 Annual poverty spell distribution. (Author's tabulation of Panel Study of Income Dynamics, 1968-1987, distribution of first observed spell.) 981
a. All races
Proportion
0.70
0.594
0.60
0.50
0.40
0.30
0.20
0.10
0.030
0.049
0.015
0.022
0.00
1 year
2 years
3 years
4 years
5 years
6 years
7 years over 7 years
Spell length
b. By race
ry
Proportion
'ed less attention
overty, in part be­
such as the Panel
; (PSID) and the
lrvey of Youth
ailable only since
ts only now have
y both long-term
:y and to observe
enerations.
0.70
0.60
Nonblack •
0.40
0.30
0.20
0.10
mics
~
extent to which
ransitory condi­
:m the length of
based on da ta
orne Dynamics,
Black
0,50
,1
0.00
1 year
2 years
3 years
4 years
5 years
Spell length
6 years
7 years over 7 years
382
counts the number of consecutive years that a
person lived in a family with an annual in­
come below the family's annual poverty line.
It asks the question, "If you follow a group of
people who have just started new poverty
spells, how long will these poverty spells
last?"
Figure 1a shows data for persons of all
races. It shows that 59.4 percent of poverty
spells last only one year. 4 An additional 16.6
percent last only two years. Thus nearly
three-quarters of all poverty spells are shorter
than two years. At the other extreme only 7.1
percent of the spells last seven or more years.
Figure 1 b shows the corresponding data for
persons disaggregated by race. From this fig­
ure it is clear that blacks stay in poveny
longer than nonblacks. Of the poverty spells
of nonblacks, 63.1 percent last )~ss than one
year; the corresponding figure for blacks is
only 48.4. Blacks also have considerably more
long spells. Almost 15 percent of their
poverty spells last seven or more years, while
only 4.3 percent of the spells for non blacks
are this long....
Welfare Dynamics
The public debate during the 1980s over wel­
fare reform was largely driven by the percep­
tion that a large number of welfare recipients
were incapable of becoming self-sufficient
without either a large carrot to persuade them
off the program or a large stick to force them
off. Conservatives charged that welfare recipi­
ents stayed on welfare for long periods, soak­
ing up tax dollars and living in perpetual de­
pendency. Liberals downplayed long-term
dependency, acknowledging that a small pro­
portion of the welfare population had long
welfare spells but emphasizing that most re­
cipients used welfare on a temporary basis.
Duration of single AFDC spells. We begin by
answering the following question: If all the
Aid to Families with Dependent Children
cases that opened in a given year were fol­
lowed for their duration, how long would
each spell last?5 Figure 2 shows that most
The Dynamics and Intergenet
IV I Generating Inequality
AFDC spells are short. For blacks, 33.7 per­
cent of spells last only a year, and an addi­
tional 16.2 percent end in the second year.6
For nonblacks, the corresponding figures are
44.0 and 22.8 percent.? By the end of two
years, half of the welfare spells for blacks and
two-thirds of the spells for nonblacks have
ended.
These data provide evidence that most wel­
fare entrants are not trapped in perpetual de­
pendency. 8 But Figure 2 also shows that al­
though most cases are not long, a substantial
minority of cases remain open for protracted
periods. At the end of seven years, 5.8 percent
of the AFDC spells of non blacks were still in
progress and 25.4 percent of the AFDC spells
of blacks were still in progress.
Dis!
(Author'S tabulation of Pa:!
Proportion
0.50
0045
0040
0.35
0.30
0.25
0.20
0.15
Recidivism and duration of multiple spells.
Roughly half of the families leaving AFDC or
Food Stamps will return to these programs at
some future date. The duration of a single
spell thus gives only a partial picture. To
know whether recipients use AFDC for exten­
sive parts of their child-rearing years, one
must take account of recidivism and the com­
bined length of multiple spells. Data on multi­
ple spells, however, are limited.
An alternative measure of participation
across multiple spells is to estimate the num­
ber of years a family receives AFDC, without
regard to breaks in spells. Figure 3 (see page
384) shows our estimates of the number of
years a woman who received welfare would
receive AFDC in the first nine years after the
birth of her first child. 9 These distributions
are shown separately by race for all women
who received AFDC (Figure 3a for blacks and
3b for nonblacks).lO
As expected, the number of total years on
welfare is substantially higher than the num­
ber of years on welfare in the first spelL Al­
though roughly half the initial spells of blacks
last two years or less, just 27.7 percent of
black recipients received AFDC for only two
of the ten years when multiple spells are taken
into account. l l For nonblacks the proportion
of spells of two years or less drops from 66.8
to 41.3 when multiple spells are included. The
0.10
0.05
0.00
1 year
2:
short spells are partial1
three to four years as I
exit and return for sl
multiple spells, howe
proportion of long sp
initial spells that taste
21.1 percent for blacl
nonblacks. When roul
these figures increas€
cent... ,
Evidence on
Intergeneratlonal
t
~!
•
We noW extend our
welfare dynamicS a·
this issue has a polit
to focus on the inter
IV I GenaratillllneqUality
:or blacks, 33.7 per­
I year, and an addi­
in the second year.6
sponding figures are
By the end of two
spells for blacks and
for nonblacks have
The Dynamics and Intergenerational Transmission of Poverty and Welfare ParticilJation
FIGURE 2 Distribution of AFDC spell length by race, 1974-1987. (Author's tabulation of Panel Study of Income Dynamics, 1974-1987, distribution of first observed spell.) Proportion
0.50
0.45
ience that most wel­
ped in perpetual de­
also shows that al­
t long, a substantial
open for protracted
;n years, 5.8 percent
nblacks were still in
. of the AFDC spells
~ress.
of multiple spells.
es leaving AFDC or
o these programs at
uration of a single
partial picture. To
se AFDC for exten­
rearing years, one
iivism and the com­
dIs. Data on multi­
.ited.
e of participation
, estimate the num­
ves AFDC, without
Figure 3 (see page
of the number of
ved welfare would
line years after the
'hese distributions
ace for all women
; 3a for blacks and
. of total years on
her than the num­
the first spell. Al­
ial spells of blacks
t 27.7 percent of
:;'DC for only two
)Ie spells are taken
ks the proportion
, drops from 66.8
are included. The
383
0.440
0.40
Nonblack •
Black
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
1 year
2 years
3 years
4 years
.5 years
6 years
7 years over 7 years
Spell length
short spells are partially replaced by spells of
three to four years as people with short spells
exit and return for short periods. Including
multi pIe spells, however, also increases the
proportion of long spells. The proportion of
initial spells that lasted seven to ten years is
21.1 percent for blacks and 11.7 percent for
nonblacks. When multiple spells are included,
these figures increase to 34.4 and 18.0 per­
cent....
Evidence on
Intergenerational Dynamics
We now extend our analysis to poverty and
welfare dynamics across generations. Again
this issue has a political context. Liberals tend
to focus on the intergenerational transmission
of family background, income, and poverty, If
low-income families have few resources to
pass on to their children or to use to finance
their children's education, then their children
will be more likely to become poor adults
themselves. Inasmuch as poverty leads to wel­
fare participation, this will also lead to inter­
generational welfare participation. According
to this view, the intergenerational transmis­
sion of poverty causes the intergenerational
correlation in welfare participation. Conser­
vatives tend to argue the opposite. Welfare
perpetuates poverty and dependence across
generations by promoting out-of-wedlock
childbearing, by breaking up families, and by
eroding the work ethic. These early childhood
experiences lower children's achievement and
lead to poverty and welfare participation in
the next generation.
The Dynamics and Interge
IV I GeReratlng inequality
884
come of .58 and 040 rel
intergenerational corre
plies relatively little
across generations.
What do these correl
one who is born in j
Solon (1992) estimates
erational correlation i
the probability that a s
the bottom quintile (2(
distribution will remat
of the income distribu
Growing up at the bo
tribution poses a sign
American society,l4 Si
and her colleagues (1
growing up in familic
term poverty have sil
tion, wages, and inco]
FIGURE 3
Estimated distribution of years a mother receives AFDC in the first ten years after conception of her first
child. (Authors' calculations based on the Panel Study of Income Dynamics, 1974-1987.)
a. All black recipients
%
35
30
25
20
15
10
5
o
1.31.3
1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years
Spell length
•
First spell
D
The Role of Family
alld Family StrICbI
All spells
b. All non black recipients
%
45
40
35
40.2
30
25
20
15
10
5
o
2.2 2.7
1 year
2 years
3 years
4 years
5 years
6 years
7 years
8 years
9 years
0.5 0.5
10 years
Spell length
Intergenerational Correlations
in Poverty and Income
If successive generations have similar in­
comes, then parents and their children are
likely to have similar probabilities of falling
into poverty.12 Although early studies of inter­
generational income mobility tended to find
relatively low correlations, recent evidence
suggests the correlation is substantial. 13 For
example, Donald Treiman and Robert Hauser
(1977) estimated that the intergenerational
correlation of income was between .24 and
.36 for men aged 25 to 34; Jere Behrman and
Paul Taubman (1990) and Gary Solon (1992)
found correlations of father's and son's in-
..
The research on tht
tionships in the expt
viewed as part of a 1~
research on the effe(
on social and econOl
hood. The research!
income and father's
ground characteristi
cation, whether or n
ried, and number
affect children's ac
1972; Featherman a
The effects of fan
well as of family
other variables, am
which is an indivic
words, background
ucation, which in t
income.
Although family
a child grew up iI
long been included
els, interest in fam
mechanism for e:
tional transmissioI
IV I SIReratlRI
r
1Re~
.£3
fC in the first ten years after conception of her
:1 Study of Income Dynamics, 1974-1987.)
,
Dynamics and Intergenerational Transmission of Poverty and Welfare ParticitN.Jtion
of .58 and .40 respectively. Such a high
correlation in income im­
r¥'l"~"~'~
relatively little mobility in incomes
generations.
do these correlations imply for some­
- - - - - - - - - - - - - - - - l e who is born in a low-income family? (1992) estimates (assuming an intergen­
correlation in income of .40) that probability that a son whose father was in bottom quintile (20 percent) of the income . will remain in the bottom quintile the income distribution as an adult is .42. up at the bottom of the income dis­
poses a significant disadvantage in tneJrICl'lln society)4 Similarly, Mary Corcoran her colleagues (1987) find that children up in families that experience long­
poverty have significantly lower educa­
length
wages, and incomes ....
[ ] All spells
Role of Family Background
Family Structure
- - - - - - - - - - - - - - - - - - i l . , . research on the intergenerational rela­
J.,Im)!u.x. in the experience of poverty can be as part of a larger body of sociological on the effects of family background social and economic achievement in adult­
The research shows that, in addition to and father's occupation, family back­
characteristics, such as parents' edu­
whether or not parents remained mar­
and number of siblings, significantly
children's achievement (Jencks et aI.,
Featherman and Hauser, 1978).
The effects of family background factors as
ength
as of family income are mediated by
variables, among the most important of
is an individual's education. In other
background has a strong effect on ed­
elatively low correlations, recent eVlderJ;:atlOll, which in turn has a strong effect on
Jggests the correlation is substantial.l3
x:ample, Donald Treiman and Robert
Although family structure-whether or not
1977) estimated that the intergenerati child grew up in a "broken family"-has
)rrelation of income was between .24
been included in status attainment mod­
:6 for men aged 25 to 34; Jere Behrman
in family instability as a possible
lUI Taubman (1990) and Gary Solon (1 ","',HalH",l>! for explaining the intergenera­
lUnd correlations of father's and son's
transmission of poverty increased in the
385
19808. 15 Today most of the background
characteristics known to affect children's
well-being have changed in ways that would
be expected to benefit children. Parents are
more educated than they were several
decades ago; fathers' occupational status has
risen; and the number of siblings in the fam­
ily has declined. In contrast, family instabil­
ity, which is believed to reduce children's
well-being, has become increasingly common
since 1950. Hence researchers have focused
on the role of family structure in reproducing
poverty across generations.
Does family instability harm children? If we
ask whether growing up in a nonintact family
is associated with being poor in adulthood,
the answer is yes. Figure 4 shows the likeli­
hood of experiencing several "high-risk"
events-dropping out of school, having a
child out of wedlock before age twenty, and
being idle in late adolescence-for children
who grow up in intact and nonintact families.
Each of these events increases the risk of
poverty and welfare dependence in adult­
hood, and each is a fairly good proxy for chil­
dren's lifetime income.
Children from non intact families are more
than twice as likely to drop out of high school
as children from intact families. Young
women from nonintact families are between
two and four times as likely to give birth out
of wedlock as young women from intact fami­
lies, and young men from nonintact families
are about 1.5 times as likely to become idle as
their peers from intact families. About half of
the association between family instability and
child well-being is due to difference in family
income. Most of the rest is due to differences
in parenting behavior (such as helping with
school work and supervising social activities)
and residential mobility.
Although family structure has a sizable im­
pact, family disruption does not automati­
cally relegate children to long-term poverty or
welfare dependence. Most children finish high
school, delay childbearing, and become at­
tached to the labor force regardless of
whether they live with one or both parents
while growing up ....
The Dynamics and Intergi
IV f aene..ating Inequality
888
Intergeneratlonll CI
in Wellare Partie"
FIGURE 4
Family stability and children's attainment. (Estimates are based on four nationally representative surveys:
the National Longitudinal Survey-Youth Cohort (NLSY), the Panel Study of Income Dynamics (PSID),
the High School and Beyond Study (HSB), and the National Survey of Families and Households (NSFH).
The bars represent "predicted values" based on models that control for race, parents' education, number
of siblings, and region of residence at age sixteen.)
a. High school dropout (males and females)
Proportion
0.30.---------------------------,
•
Intact
Nonintact
0.20 I-------l
0.10
0.00
NLSY
PSID
HSB
NSFHl
b. Teen premarital birth (females)
Proportion
0.30
r-------------------------,
0.20 I - - - - - - - - - - - - - - - - - - - - - - - - - - - - - l
t
t
t
0.10 I----...,........- r - - - - - - - - - - j
~
t
0.00
NLSY
PSID
HSB
NSFHl
t
c. Idleness (males)
t
Proportion
0.30
r----------------------­
t
0.201-----------------------­
•
.,
0.10
t
.­
0.00
NLSY
PSID
HSB
•
.­
•
The research on inte
participation suggest
across generations. Pe
finds that although a
of the daughters of we
receive welfare themsel
is substantially greater
ters whose mothers d
The probability that a
a child and receives
mother received welt:
.066 if the mother nev
comparable figures f(
.136. 16 McLanahan (1
from a family that I
more of its annual inC!
the daughter was betl
and sixteen has the i
welfare indicators on
whites, while a simplt
ceipt during the ages t
strongest effect for bl~
Because of the lack
histories of both gem
tempt to construct me
fare use in both genl
Martha Hill, and Sau
ure welfare dependen
as receiving welfare (
year period. They fin
women whose familic
during their adolesce
teen to fifteen) did n<
between the ages of
three. Only 20 perc
users themselves. W
justed for differences
individuals (income ~
relationship betweel
fare use and childre
but remains positive.
Moffitt (1992) r
studies and concludl
evidence of stroni
parental welfare rec
fare receipt, even tb
, I S.....atlng !nUlluallty
The Dynamics and Intergenerational Transmission of Poverty and Welfare Participation
Intergenerational Correlations
In Welfare Participation
presentative surveys:
E Dynamics (PSID),
-Iouseholds (NSFH).
, education, number
ntact
•
•
•
The research on intergenerational welfare
participation suggests common patterns
across generations. Peter Gottschalk (1992)
finds that although a substantial proportion
of the daughters of welfare recipients do not
receive welfare themselves as adults, their risk
is substantially greater than the risk of daugh­
ters whose mothers did not receive welfare.
The probability that a nonblack daughter has
a child and receives welfare is .261 if the
mother received welfare, whereas it is only
.066 if the mother never received AFDe. The
comparable figures for blacks are .486 and
.136. 16 McLanahan (1988) finds that coming
from a fa~ily that received 50 percent or
more. of its annual income from welfare while
the daughter was between the ages of twelve
and sixteen has the strongest effect among
welfare indicators on AFDC participation for
whites, while a simple measure of welfare re­
ceipt during the ages twelve to sixteen has the
strongest effect for blacks.
Because of the lack of data on full welfare
histories of both generations, few studies at­
tempt to construct measures of long-term wel­
fare use in both generations. Greg Duncan,
Martha Hill, and Saul Hoffman (1988) meas­
ure welfare dependence as heavy use, defined
as receiving welfare continuously for a three­
year period. They find that 64 percent of the
women whose families were highly dependent
during their adolescence (defined as ages thir­
teen to fifteen) did not use welfare themselves
between the ages of twenty-one and twenty­
three. Only 20 percent were heavy welfare
users themselves. When the analyses are ad­
justed for differences in the background of the
individuals (income and family structure), the
relationship between family of origin's wel­
fare use and children's welfare use declines
but remains positive.
Moffitt (1992) reviews these and other
studies and concludes that there is consistent
evidence of strong correlations between
parental welfare receipt and daughter's wel­
fare receipt, even though this preliminary re-
887
search has not yet explained the causes of the
strong intergenerational correlation. Because
families receiving welfare are poor-indeed,
poverty is a condition of welfare receipt-we
would expect children from welfare families
to have higher rates of poverty and welfare
use as adults than children from nonpoor,
nonwelfare families. Intergenerational corre­
lation, therefore, does not necessarily indicate
a causal relationship. Daughters and their
mothers may simply share characteristics that
increase the probability of their both receiving
assistance.l7 For example, if both the mother
and the daughter grow up in neighborhoods
with poor-quality schools, both will be more
likely to have lower earnings and, hence, a
greater need for income assistance. In this
case, taking the mother off of welfare will not
lower the probability that the daughter will
receive assistance. Changing the quality of the
school the daughter attends, however, will
raise her income and, in turn, lower the prob­
ability that she receives public assistance.
*
.,
We have focused on two broad issues: (1) the
extent to which individuals and families are
poor for long periods of time or use welfare
for extended periods; and (2) the extent to
which the experiences of individuals as chil­
dren are associated with their economic situa­
tion as adults or, more specifically, the extent
to which poverty and welfare use are passed
on across generations.
The results regarding the first issue sug­
gest that a majority of the poor remain poor
for short periods of time, and that a major­
ity of welfare recipients receive welfare for
only a few years. There is, however, a mi­
nority who experience long-term poverty or
welfare dependence. By most accounts, nev­
ertheless, temporary dips into poverty and
short-term participation in welfare are much
more common than long-term spells of
poverty and dependence.
The results regarding the second issue­
whether poverty and welfare dependence are
passed along from generation to generation­
also suggest that the media and some scholars
388
have overstated the extent to which poverty
and welfare are traps in which individuals
and families are caught. The large majority of
families and individuals who are poor or who
use welfare are not trapped, and neither are
their children. It is true that individuals who
lived in poor families as children are more
likely to experience poverty as adults, and it is
true that individuals whose families partici­
pated in welfare programs when they were
children are more likely to receive welfare as
adults. But it is also true that as many as two­
thirds of the children from these families man­
age to escape poverty and dependence when
they grow up.
Notes
. 1. Annual income would be the proper measure
If people could only save or borrow to smooth in­
come within each year.
2. Note that this argument implicitly assumes
that people can smooth their consumption by ei­
ther saving Of borrowing against future income.
The argument for extending the accounting period
beyond a year becomes much weaker if many
poverty spells occur early in life when income
smoothing through saving may not be possible.
3. This view is still often reflected in public state­
ments. For example, in his famous "Murphy
Brown" speech, Vice President Dan Quayle stated
that "the intergenerational poverty that troubles us
so much today is predominately a poverty of val­
ues." Boston Globe, May 21,1992.
4. We find more one-year spells than reported in
Bane and Ellwood (1986). This reflects our use of
the official poverty line rather than 125 percent of
the official thresholds, our inclusion of post-1982
data, our inclusion of persons over sixty-five, and
their excluSion of some one-year spells. Using their
procedure reduces the frequency of one-year spells
by.084.
5. This question differs from the question that
asks how long spells currently in progress will last.
6. Our results differ from those of Ellwood
(1986) who used fewer years of data and who
looked only at spells of both receiving AFDC and
being a female head of household.
7. Blank (1989) finds somewhat shorter dura­
tions because she uses monthly data.
8. Although AFDC receives by far the most at­
tention, the Food Stamp program provides assis­
tance to a much larger caseload. Burstein and
The Dynamics and Int
IV I Generating Inequality
Visher (1989) show that there is even more
turnover in the Food Stamp caseload than in the
AFDC caseload. At the end of one year roughly
two-thirds of all Food Stamp cases h~ve been
closed. If long-term recipiency is defined as a Food
Stamp spell that lasts for three years or more, then
only 15 percent of all Food Stamp cases could be
classified as long term.
9. Because AFDC is available to pregnant
women, we mclude the year prior to birth and the
following nine years in the ten-year window.
10. These data are generated by estimating dis­
crete time duration models for spells on and off of
welfare and simulating the predicted spell dura­
tions over the ten-year period. The data on the first
spell differ from the data in Figure 2, which sam­
ples all spells.
11. Duncan, Laren, and Yeung (1991) examined
families in the PSID that received AFDC at least
once during the first eighteen years of their child's
life. Although their conclusions are based on
smaller samples that do not allow for disaggrega­
tion, they find similar overall patterns.
12. Furthermore, a focus on the association in
income across generations may be more informa­
tive, as individuals who experience childhood
poverty may experience near-poverty as adults.
They would not be counted as poor, but analyzing
lllcome, rather than poverty status, overcomes the
problem of living standards above the poverty line.
13. Becker and Tomes (1986) concluded that the
intergenerational correlation in income was some­
where around .17, based on their review of some
early studies. This finding suggests a fairly small ef­
fect of parental income on the income of children
later as adults.
14. If the intergenerational correlation in income
were zero, the probability that the child of a poor
family would fall into poverty would be the same
as the probability for the child of a rich family
namely .20.
'
15. For a review of this literature, see McLana­
han and Booth (1989).
16. These patterns are attenuated but not elimi­
nated after controlling for a large number of factors
that may also affect the daughter's participation.
17. Gottschalk (1992) finds some evidence that
the relationship is not just spurious.
t
~
I,
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