Does AFDC-up encourage two-parent families?

Effective October 1990, the Family Support Act (FSA) of 1988 extended the previously state-optional AFDC-Unemployed Parent (UP) program to all states. This policy was undertaken in an effort to reduce the two-parent penalty of the AFDC program, but little is actually known about UP and its influence on family structure. This study clarifies what is meant by “two-parent family” in the federal legislation and provides new evidence on AFDC's incentive effects. The empirical analysis makes use of the cross-state variation in the generosity of AFDC benefits and the presence (or absence) of AFDC-UP before the FSA of 1988. Specifically, these state-level data are appended to data from the 1987 National Survey of Families and Households (NSFH). A real advantage of the NSFH is that it allows for the identification of those truly eligible for the UP program-married and unmarried couples who have an “in-common” dependent child. The major empirical finding is that contrary to the hopes of Congress, a state's provision of a UP program is not found to encourage two-parent families.