Changing Family Structure and Poverty

It has long been well documented that family structure and poverty are interrelated. The best-known example is that of single-parent families with children. Members of such families are much more likely to be poor than members of any other families. In 2006 in the US, for instance, about 8 percent of married couples with children and 40 percent of single-mother families were poor.[1] Even if this post will mainly be about the US, we reproduce below the evolution of poverty in Europe for different types of households. It is immediately seen how bad one parent families are doing.


Source: Eurostat, 2012

The interrelationship between family structure and poverty implies that changes in family structure may impact the nature and extent of poverty. This was the topic of a recent article by Maria Cancian and Deborah Reed,[2] which we would like to review in this post.

The changes in the family structure in the US during the last four decades can be summarized as follows:

– fall in the marriage rate,

– increase in the divorce rate,

– increase in non-marital cohabitation,

– diversification of living arrangements,

– decline in the average number of children present in the household,

– increase in the probability for a child to live in a household that does not include both biological parents.

The authors show that the combination of these factors has increased poverty.

Another major change in the American society was the increased participation of women in the labor force, especially of women with children. This has, on the other hand,  decreased poverty, but this could not offset the rise resulting from changes in the family structure.

Describing how families and poverty rates have changed makes the authors raise an important dilemma of public policies. Either they aim at changing family structure, or they respond to such changes. This dilemma is best illustrated by the case of the Aid to Families with Dependent Children (AFDC), a federal assistance program launched in 1935 to respond to the increase in the number of single-parent families with children. The program provided financial assistance to children of those families. Critics argued that AFDC discouraged marriage and parental responsibility. As a consequence, the benefits declined substantially after the mid-1970’s, with the objective to alter family behaviors and decrease the number of single-parent families with children – which eventually happened in the following years.

There are two considerations we should keep in mind when tackling the dilemma “changing family structure” vs. “responding to changes in family structure.” First, it is key to evaluate and measure the effect of policies on family behavior. A policy that proves to be beneficial to poor families without increasing the number of poor families by distorting behavior should be implemented. That raises the question of the difficulty of measuring the policy effects on behavior. There is a difference, indeed, between a correlation between a policy and a change in behavior and a causality between the two. Again, the best example is given by the change in the AFDC that occurred in the 1970’s. It has been accompanied with a decline in childbearing among poor women, as mentioned above, but that happened at the same time as a general decrease in fertility. It is hard to claim that the change in policy explains the decrease in childbearing. Careful estimates of the marriage effect of policies hardly agree on a negative impact of welfare on marriage, and, when they exhibit such an impact, it is low.

Second, the choice of a policy involves the choice of what the economists call the social welfare function, that is, the way one wishes to trade-off between the effects of policies on different sets of people in society. Assume, for instance, that ethical reasons lead one to consider that the welfare of children has absolute priority. The fact is that there will always remain children in single-parent families in spite of policies aiming at encouraging marriage, reducing divorce or reducing nonmarital childbearing. As a consequence, those children need to receive the help that will bring them out of poverty and the effects of those on behavior becomes secundary.

[1] This has been computed by Maria Cancian and Deborah Reed from the American Community Survey. See the reference below, p114.

[2] Maria Cancian and Deborah Reed, ‘Family structure, childbearing, and parental employment: implications for the level and trend in poverty, in Changing Poverty, Changing Policies.

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