The effect of welfare eligibility on the labor force participation of women of Mexican origin in California

Abstract

The relationship between AFDC, Food Stamp, and Medi-Cal Program eligibility, on the one hand, and labor force participation, on the other, was analyzed by comparing the labor force participation rates of women of Mexican origin who were ‘fully eligible’ for these programs with those of ‘less eligible’ women. Marital status, husband's income, and legal residence in the United States were used to define levels of program eligibility for this sample. The effects of education, English fluency, age, the number and ages of children, and the number of other adults in the household (excluding the mother and spouse) were controlled in logistic regression procedures. The results of the multivariate analyses show that AFDC, food stamps, and Medi-Cal combined inhibit the labor force participation of unmarried mothers. There is no evidence, however, that food stamps and Medi-Cal influence the labor force participation of married mothers. Earnings information on this sample of California women indicate that welfare benefits for unmarried mothers are highly competitive with net earnings, primarily because of the cost childcare. The data imply that free or subsidized childcare would increase labor force participation and reduce AFDC enrollment.