| Sarah Simmons
University of Virginia
Welfare (to school?) to work: How welfare reform affects collegiate attainment
FINAL REPORT:
I model a woman's employment, education, fertility, marriage, and welfare receipt behavior as a series of interrelated discrete choices over time. A primary innovation of this model is the distinction between school enrollment and years of educational attainment. The detail with which this research models educational inputs and outputs makes it particularly wellsuited for examining the impact of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) on the educational attainment of low-income women. Although there has been considerable study of the employment effects of Òwelfare reformÓ since its implementation in 1997, there has been far less attention paid to how it affects educational outcomes. How this program changes incentives to invest in education, particularly at the collegiate level, is important in gauging the long run economic impact of the policy.
Individuals in my model make different career and family decisions due to observed characteristics that affect consumption and nonconsumption utility of choices. Choices differ also due to randomness in realizations of wages, translation of educational inputs into attainment, and choice-specific time shocks to utility. The human capital accrued through postsecondary education is modeled such that actual attainment is the measure of interest. The main education choice facing a woman in this model is how much effort to put towards completing additional schooling if she chooses to enroll. While a woman cannot directly choose to complete an additional year of school, her chances of doing so increase with the amount of effort she puts forth.
Using maximum likelihood estimation, I estimate a structural model of womenÕs choices using data from the National Longitudinal Survey of Youth in years prior to welfare reform. The results from the structural model are qualitatively consistent with the relationships found in the non-structural portion of this research but suggest an important role for unobserved heterogeneity.
Specific plans exist and are under way to use maximum simulated likelihood estimation to estimate an empirical model that includes unobserved heterogeneity in womenÕs tastes and ability. I will use estimated parameters from that model to simulate the effect of welfare reform on the collegiate attainment of low-income women.
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