University of North Carolina’s Christopher Ruhm looks at a key issue underlying not only US welfare reform, but also the recent Australian changes to the parenting payment program. Does encouraging poor parents to work help or hinder their children’s outcomes? On balance, he seems to find in favour of a pro-work policy, at least insofar as it affects low-income parents:
This study investigates how maternal employment is related to the outcomes of 10 and 11 year olds, controlling for a wide variety of child, mother and family characteristics. The results suggest that limited amounts of work by mothers benefit youths who are relatively "disadvantaged" and even long hours, which occur relatively rarely, are unlikely to leave them much worse off. By contrast, maternal labor supply is estimated to have much more harmful effects on "advantaged" adolescents. Particularly striking are the reductions in cognitive test scores and increases in excess body weight predicted by even moderate amounts of employment. The negative cognitive effects occur partly because maternal labor supply reduces the time these children spend in enriching home environments. Some of the growth in obesity may be related to determinants of excess weight that are common to the child and mother. Work hours are also associated with relatively large (in percentage terms) increases in early substance use and small decreases in behavior problems; however, neither are statistically significant.
I’m not sure I like his identification strategy (I’d prefer a natural experiment, where we took account of the unobservables a bit better), but it’s an interesting finding.