Abstract
Family caps seek to reduce fertility among welfare recipients by denying additional cash assistance to recipients who have children while on welfare. A necessary condition for family caps to be an effective policy tool is that welfare recipients respond to financial incentives in making decisions that affect subsequent fertility outcomes. This paper uses data from the 2001 and 2004 panels of the Survey of Income and Program Participation (SIPP) to examine whether welfare mothers respond to the incentive provided by the Aid to Families with Dependent Children/Temporary Assistance to Needy Families (AFDC/TANF) system in determining whether or not to have a second child. The results show no evidence that family caps have an effect on the subsequent childbearing of never married women.
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