Child Poverty and Welfare Benefits: A Reassessment with State Data of the Claim That American...

American Journal of Economics and Sociology, Inc.

Child Poverty and Welfare Benefits: A Reassessment with State Data of the Claim ThatAmerican Welfare Breeds DependenceAuthor(s): Sanford F. Schram, J. Patrick Turbett and Paul H. WilkenSource: American Journal of Economics and Sociology, Vol. 47, No. 4 (Oct., 1988), pp. 409-422Published by: American Journal of Economics and Sociology, Inc.Stable URL: http://www.jstor.org/stable/3486552 .

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Child Poverty and Welfare Benefits: A Reassessment with State Data of the Claim ThatAmerican

Welfare Breeds Dependence

By SANFORD F. SCHRAM, J. PATRICK TURBETT and PAUL H. WILKEN*

ABSTRACT. Several critics of the American welfare system have claimed that it exacerbates the problem of poverty by making living in poverty preferable to acting in ways that would promote upward mobility. One version of this argument, by Gallaway and Vedder, proposes that in the 1970s this resulted in states with high welfare benefits exhibiting increases in child poverty. State data for 1970, 1980, and 1970-1980 are analyzed by means of multiple regression to assess this argument. The results suggest that the relationships between high welfare benefits, child poverty, and recipiency of Aid to Families with Dependent Children (AFDC) are much less clear-cut than has been alleged. They also cast doubt on the wisdom of using aggregate data to analyze these relationships.

Introduction

IN SPITE OF ITS PERSISTENCE, poverty is not the burning issue it once was for Americans.' Nonetheless, current welfare policies continue to draw heavy crit- icisms both from those who argue government is not doing enough2 and those who would have us believe that government is doing too much.3 This current debate raises the question whether welfare is part of the answer to the poverty puzzle or whether it is part of the poverty problem.4

On the basis of this debate an old hypothesis has gained a new currency: the welfare system breeds poverty. In many ways, this is a thesis the right has bor- rowed from the left. In the 1970s as left-leaning analysts grew disenchanted with existing welfare programs, they pointed out that these programs, in particular Aid to Families with Dependent Children (AFDC), were administered in ways which often undermined the autonomy and stability of poor families while not doing nearly enough to ensure their self-sufficiency in the long run and their need for minimally adequate income in the short run.5 There was even the suggestion, buttressed by no shortage of data, that the "social wage" (social

* [Sanford F. Schram, Ph.D., is associate professor of political science; and J. Patrick Turbett, Ph.D. and Paul H. Wilken, Ph.D., are associate professors of sociology in the State University of New York College at Potsdam, Potsdam, N.Y. 13676. The authors' names are listed in alphabetical order.] An earlier version of this paper was presented at the annual meeting of the American Sociological Association in New York in September, 1986. American Journal of Economics and Sociology, Vol. 47, No. 4 (October, 1988). ? 1988 American Journal of Economics and Sociology, Inc.



410 American Journal of Economics and Sociology

welfare benefits) was a growing drag on the economy, an impediment to recip- ients' willingness to take work and a factor in producing the simultaneous oc- currence of high inflation and high unemployment: stagflation.6

For some of these analysts, these developments signaled the limited and contradictory nature of the social welfare State and the need for a transformation of American social and economic policy.7 Nonetheless, in this climate of re- consideration, other analysts have drawn different conclusions. Focusing on the notion that the welfare system promotes poverty, more conservative-minded observers have concluded that we need to pare back social welfare spending, create disincentives for the poor to take welfare and free the market as the means of reducing poverty and setting the economy right.8

Actually, there are at least two schools of thought among the critics of the welfare system. The first school suggests that massive increases in social spending from the mid- 1960s to the late 1970s have essentially won the war on poverty.9 For these analysts the problem has become an overly generous social welfare State which lifts some poor into the middle class (especially if in-kind benefits are counted) while sapping them to their motivation to become self-sufficient. The second school of thought emphasizes that although poverty had been re- duced in the 1960s and 1970s, it nevertheless persisted in the face of dramatic increases in social welfare spending, and the gains that had been made were artificial because "latent poverty" (poverty before transfers) has actually been increasing.' However, while their diagnoses differ, the two schools agree on the remedies: social welfare cutbacks, disincentives for taking welfare, and al- lowing the market to grow. Welfare is a "trap" which 'breeds' poverty.

For dependency theorists like Gallaway and Vedder and Charles Murray," in the 1960s and 1970s changes in our social politics and programs, including and in particular AFDC, markedly changed the rules which structured the poor's behavior. According to Murray, the rule changes were advocated by a liberal, guilt-ridden elite which sought to eradicate poverty while shifting blame from "the victim" to "the system." These rule changes absolved the poor of much of the responsibility for their plight and, in so doing, encouraged the poor to do things which only further mired them in the welfare trap. Rule changes encouraged poor families to take welfare even when an able-bodied male was present and not working. Rule changes encouraged poor families to work less than full time and thereby maximize their combination of wages and welfare. Rule changes resulted in increases in the proportion of births to unwed teenage mothers and growth in the number of poor female-headed families. Rule changes made a welfare-subsidized poverty existence more bearable. The net result of these changes was to create disincentives for the poor to work, leave welfare, become self-sufficient and get out of poverty.



Welfare 411

In the analysis which follows, we focus on one specific hypothesis that has been proposed by the welfare system's critics. We examine Gallaway and Ved- der's suggestion that high benefits are attracting poor families onto welfare and increasing child poverty particulartly, so that in the 1970s high-benefit states tended to have increases in child poverty while low-benefit states tended to have declines."2

II

Child Poverty and the Welfare Trap

CHILD POVERTY is indeed increasing. According to the Congressional Budget Office, in 1983 13.8 million children, 23 percent of all preschool children and 21 percent of all school-age children, lived in poverty.'3 This represents a re- surgence in child poverty from a low of 13.8% in 1969 to 22.2% in 1983. The poverty rate for children had declined by 48.7% from 1959 to 1969, which was actually 5.9% more than the decline in the overall rate during this time. Between 1969 and 1979 the child poverty rate oscillated while inching upward for a 21% increase. From 1979 to 1983, however, the rate increased a substantial 35% from 16.4% to 22.2%.

It, however, remains an open question whether high welfare benefits encourage dependency, discourage work and create more child poverty.'5 The poverty rate for children grew between 1969 and 1983 but simultaneously the real value of AFDC benefits fell by one-third.'6 And benefits during this period declined in real value in all states except Maine.'7

Critics of the dependency thesis do not accept many of its claims about the behavioral consequences of welfare. Ellwood and Bane emphasize that although poor women in high-benefit states may be more likely than their counterparts in low-benefit states to live independent of parents and spouse, they are not more likely than their counterparts in low-benefit states to divorce or give birth out of wedlock.'8 Ellwood and Summers have shown that the percentage of all children living in female-headed households rose dramatically after 1972 from 14 percent to almost 20 percent; however, it is unlikely that this increase was attributable to welfare as the percentage of all children in homes collecting AFDC stayed level at about 12 percent.'9

John Schwarz has argued that the growth in AFDC benefits and rolls in the 1960s and 1970s did not destroy the work ethic among the poor. He does note that "the heads of almost 50 percent of [poor] families worked [at some time during the year] in 1979, compared with the heads of 59 percent of such families in the early 1960s. ,20 Nonetheless, for him, the increase in poverty during the 1970s is attributable largely to economic slowdown relative to a growing working- age population rather than to increased access to, and expenditures on, welfare.




TABLE 1 CHANGE IN AFDC BENEFITS AND CHILD POVERTY

50 STATES 1970-1980

Maximum AFDC Benefits for X of Related Children a family of 4 Under 18 in Poverty

% Change 1970 1980 % Change (1980 $s) 1970 1980 % Change

Alabama $ 81 $148 82.7 2.1 29.3% 23.6% -19.5

Alaska 372 514 38.2 -22.8 14.7 12.1 -17.7

Arizona 167 244 46.1 -18.4 17.9 16.5 -7.8

Arkansas 111 188 69.4 -5.4 31.3 23.4 -25.2

California 261 563 115.7 20.5 12.7 15.2 19.7 Colorado 242 363 50.0 -16.2 12.7 11.5 -9.4

Connecticut 327 553 69.1 -5.5 7.8 11.4 46.2

Delaware 172 312 81.4 1.3 12.3 15.6 26.8

Florida 134 23u 71.6 -4.1 19.2 18.5 -3.6

Georgia 149 193 29.5 -27.6 24.1 21.1 -12.4

Hawaii 271 546 115.0 12.6 10.3 13.0 26.2

Idaho 241 367 52.3 -14.9 12.7 14.3 12.6

Illinois 271 350 28.7 -28.1 11.0 14.9 35.5

Indiana 205 315 53.7 -14.1 9.3 11.9 28.0

Iowa 243 419 72.4 -3.7 10.1 11.5 13.9

Kansas 321 390 21.5 -32.1 12.0 11.4 -5.0

Kentucky 171 235 37.4 -23.2 24.9 21.6 13.3

Louisiana 104 187 79.8 0.4 30.0 23.5 -21.7

Maine 168 352 109.5 17.1 14.5 15.8 9.0

Maryland 200 326 63.0 -8.9 11.5 12.5 8.7

Massachusetts 349 444 27.2 -28.9 8.8 13.1 48.9

Michigan 350 501 43.1 -20.0 9.4 13.3 41.5

Minnesota 334 486 45.5 -18.7 9.5 10.2 7.3

Mississippi 60 120 100.0 11.7 41.3 30.4 -26.4

Missouri 130 290 123.1 24.6 14.9 14.6 -2.0

John Cogan emphasizes that declines in low-paying agricultural jobs in the South were a major reason for increased unemployment among black teenagers.2' Danziger, Havemen and Plotnick have stressed that the anti-work effects of taking welfare are modest.22

Sara McLanahan et al. have rebuked the dependency theorists' arguments by showing: (1) poverty rates are more tied to unemployment than to benefit levels; (2) reductions in work effort attributable to increases in benefits are insufficient to account for work declines among the poor; (3) illegitimacy rates are not associated with levels of benefits; and (4) stable poverty levels over the last decade or so are largely a product of a stagnant economy.23

Lastly, Danziger and Plotnick have noted that social spending has been more effective than economic growth in reducing poverty, and that the positive anti-



Welfare 413

TABLE 1 (cont.)

Maximum AFDC Benefits for % of Related Children a family of 4 Under 18 in Poverty

% Change 1970 1980 % Change (1980 $s) 1970 1980 % Change

Montana 206 331 60.7 -10.2 13.3 13.8 3.8 Nebraska 226 370 63.7 -8.5 12.2 12.1 -0.8 Nevada 176 314 78.4 -0.3 9.1 10.0 9.9 New Hampshire 294 392 33.3 -25.5 7.9 9.4 19.0 New Jersey 324 414 27.8 -28.6 9.2 14.1 53.2 New Mexico 179 267 49.2 -16.7 26.7 22.1 -17.2 New York 313 476 52.1 -15.0 12.7 19.0 49.6 North Carolina 159 210 32.1 -26.2 23.6 18.3 -22.5 North Dakota 30U 408 36.0 -24.0 15.9 14.3 -10.1 Ohio 200 327 63.5 -8.7 10.0 13.2 32.0 Oklahoma 189 329 84.7 3.2 19.7 15.7 -20.3 Oregon 279 569 103.9 13.9 10.8 12.0 11.1 Pennsylvania 313 395 26.2 -29.5 10.9 13.9 27.5 Rhode Island 263 453 72.2 -3.8 11.7 13.6 16.2 South Carolina 103 158 53.4 -14.3 28.7 21.1 -26.8 South Dakota 270 361 33.7 -25.3 18.9 20.0 5.8 Tennessee 129 148 14.7 -35.9 24.6 20.6 -16.3 Texas 148 140 -5.4 -47.2 21.7 18.7 -13.8 Utah 218 429 96.8 9.9 10.6 10.7 0.9 Vermont 327 553 69.1 -5.5 11.5 13.9 20.9 Virginia 261 360 37.9 -22.9 18.0 14.9 -17.2 Washington 274 536 95.6 9.3 9.8 11.5 17.3 West Virginia 138 249 80.4 0.8 24.3 18.5 -23.9 Wisconsin 274 529 93.1 7.9 8.9 10.4 16.9 Wyoming 227 340 49.8 -16.3 11.8 7.7 -34.7

Average $224.50 $354.28 60.3 -10.4 15.8 15.3 4.8

SOURCE: See note 27.

poverty effects of social spending have far outweighed its relatively modest negative work and family effects. Although they stress the need for more economic growth, their analysis indicates that economic growth itself is not enough to eradicate poverty and that cutbacks in income transfers focused on the poor will only increase poverty.24

Nevertheless, high welfare benefits may be operating to create more child poverty. Table 1 shows that in the 1970s decreases in child poverty rates were usually in states with relatively low AFDC benefits and increases were in states with relatively high benefits. In light of these differences among states, and in the face of national trends of increasing child poverty, the welfare benefit-child poverty thesis requires closer examination.




Gallaway and Vedder suggest that there emerged in the 1970s a new "structural poverty" which was a "poverty by choice." Their argument is that by the 1970s welfare benefits had become high enough in many states to make poverty bearable and thereby create disincentives for many poor people to choose work over welfare and work their way out of poverty. The result was that while heads of families were choosing poverty as their standard of living, their children were

TABLE 2

Regressions for Child Poverty and Maximum AFDC Benefits

50 American States

1970-1980

Percent of All Children in Families with Incomes Below the Poverty Line

1970 1980-

Maximum AFDC Benefits -.0002* -..0002* -.0001* -.0001* (2.2) (2.0) (2.5) (3.3)

Per Capita Income -.00005* --- -.00002* --- (4.5) (3.0)

Median Income -.00002* --- -.00001* (4.5) (3.7)

Average Family Size --- .0927* --- .0747* (2.6) (2.5)

X Female-headed .8437* --- .2375 (2.0) (1.1)

Unemployment Rate .8813* 1.092* .5377* .4084* (2.3) (2.8) (2.2) (1.6)

X Farnworkers .9221* 1.415* 1.276* 1.259* (1.8) (2.9) (2.5) (2.4)

: Black .3909* .2340* .2090* .1293* (5.6) (2.5) (3.8) (1.9)

Population .00000007 .0000003* .00000005 -.00000005 (.05) (2.0) (.66) (.06)

A4justed RP .83 .83 .73 .77

?fOTE: t-statistics are in parentheses. Constants are unreported.

* = significant at .05 level for a one-directional test.

without choice being thrust into poverty.25 The major implication of this analysis is that welfare is now causing poverty, not preventing it. The new solution is to lower welfare benefits, not raise them. Only by lowering benefits and discour- aging the poor from taking welfare can we now begin to lower the level of the new "structural poverty."

The Gallaway and Vedder analysis reflects the assumption that there are jobs available which the poor can take in lieu of welfare and which will lead them eventually on that road of upward mobility out of poverty. It is for this reason



Welfare 415

that analysts can suggest that the "new structural poverty" is a product of "choice" by the poor. But the declining availability of those low-skilled, manual jobs which the poor may be best equipped to take throws into doubt the tenability of this assumption. Nonetheless, on the basis of these assumptions, critics of the welfare system envision a welfare trap which nurtures short-term, counter- productive, poverty-inuring behavior among the poor. In other words, high welfare benefits encourage illegitimacy, separation, divorce, the formation of female- headed families, decline in work effort and other behaviors which all create obstacles to the upward mobility of the poor.26

Gallaway and Vedder's analysis also has several flaws. First, even assuming there is a positive correlation between the level of welfare benefits as they suggest, there may be some third factor which accounts for the observed relationship. For example, the high-benefit states are all in the North and the low- benefit states are all in the South. Consequently these differences may merely reflect the relatively higher rates of economic growth of the Southern states during the 1970s. Gallaway and Vedder only control for per capita income in their analysis and fail to account for other possible factors. Second, while Gal- laway and Vedder emphasize declines in poverty, the percent of children poor in the 1970s increased 21% nationally (and by 4.8% for the average state). (See Table 1.) This increase was accompanied by an average 10.4% decrease in maximum benefits per state in real dollars. These trends imply a relationship between welfare benefits and child poverty exactly opposite of that inferred by Gallaway and Vedder. Third, even assuming that high welfare benefits are related to relatively high increases in poverty, such aggregate relationships do not constitute evidence that these benefits are encouraging individuals to "choose" poverty and thereby condemn their children to an impoverished existence.

III

Methodology

OUR OWN ANALYSIS of factors related to child poverty for the 1970-1980 period differs from Gallaway and Vedder's in that we include a number of alternative factors which may explain variations in changes in child poverty across the states. We also examine the relationship between welfare benefits and AFDC case levels to see if higher benefits promote increased utilization of that particular welfare program. For both child poverty and AFDC levels we present cross- sectional results for 1970 and 1980 before we examine change between 1970 and 1980.

Our analysis of change, however, does resemble Gallaway and Vedder's in one important respect. Since they showed that states with the highest maximum




benefits had the greatest increases in child poverty during 1970-1980, we include the average of maximum benefits for 1970 and 1980 to see if this was in fact the case. All other variables in our change equations are expressed as rates of change.

Our measure of welfare benefits is the maximum monthly AFDC payment per recipient in each state for 1970 and 1980, as shown in Table 1. Our measure of child poverty is the percent of related children under eighteen in poverty in each state. Our measure of AFDC case levels is the number of families on AFDC. As for variables reflective of alternative explanations of child poverty, we include

TABLE 3

Regressions for Changes in Child Poverty and Maximum AFDC Benefits

50 American States

1970-1980

Percentage Change in Percent of All Children in Families with Incomes Below the Poverty Line

Maximum AFDC Benefits .0007* .0003 (4.2) (1.1)

Change in Per Capita Income -.9429* --- (3.9)

Change in Median Income --- .0650 (.69)

Change in Average Family Size --- 2.359* (2.0)

Change in % Female-headed --- .6307* (3.2)

Change in Uner.mployment Rate .0841 .1139* (1.4) (1.8)

Change in % Farmworkers .2037* .2245* (3.6) (3.6)

Change in % Black .0158 .1237 (.16) (1.1)

Cheange in Population .0010 .0606 (.01) (.45)

Anjusteci a .78 .75

tIOTE: t-statistics are in parentheses. Constants are unreported.


for each state the percent of all persons Black, the annual average monthly unemployment rate, the percent of the workforce farm workers, and population.27 We use the percent of the population Black to reflect the disproportionately higher poverty, unemployment and single-parent family rates among Blacks as compared to Whites. We use the unemployment rate as an indicator of the availability of work, and we examine the percent of the workforce farm workers as an indicator of the level of development of each state's economy.28 While agriculturally-based states may still have a relatively high proportion of low-



Welfare 417

wage jobs available to the poor, they will have relatively less economic oppor- tunities in general than more industrialized states.29 We include population to control for the effects of size when examining the number of families on AFDC and the level of child poverty. Our rationale for including population changes in our change equations is that increases in state child poverty rates may be a product of population declines which largely resulted from the out-migration of nonpoor people. If that were the case, then increases in child poverty rates in those states would be attributable to declines in nonpoor persons rather than increases in poor persons. This may especially be true in declining industrial states with high benefits, where nonpoor persons are likely to leave and poor persons are likely to stay.

Although Gallaway and Vedder included per capita income in their analysis, there is some question as to whether it or median family income best measures the effects of income on the poverty rate. On the one hand, Glen Cain has written, "Median income and earnings are logically and historically the principal correlates of poverty.' 30 Cain notes that per capita income may rise while earnings decline simply because of changes in the worker/nonworker ratio in the population. Therefore per capita income can rise while family incomes decline and produce more poverty. On the other hand, Rebecca Blank has suggested that median family income reflects changes in family size and structure and thereby distorts the effects of the general availability of income on poverty.3'

In light of this difference of opinion, we carried out two separate analyses of the relationship between welfare benefits and child poverty and AFDC levels. In one we used per capita income, as Gallaway and Vedder did, while in the other we used median income, and included average family size and percent of families female-headed to control for changes in family size and composition.

IV

Findings

TABLE 2 PRESENTS REGRESSIONS for the percentage of related children in poverty in 1970 and in 1980. In all four of the equations, we find that maximum benefits are significantly but negatively related to child poverty. High-benefit states tend to have a relatively lower proportion of their children in poverty than low- benefit states. These findings appear to contradict the Gallaway-Vedder claim that high welfare benefits promote child poverty. Moreover, all the equations show that economic factors, such as average income and the unemployment rate, are significantly associated with child poverty rates. States with lower average incomes and higher unemployment rates (as well as larger percentages of the workforce farmworkers and larger proportions of the population Black) have higher child poverty rates than wealthier states with lower unemployment rates.




When we turn to Table 3, however, which presents regressions for the rate of change in child poverty on average maximum AFDC benefits and our battery of relevant factors expressed as 1970-1980 rates of change, we find mixed results. In the equation which includes per capita income, we find that high-benefit states tended to have greater increases in child poverty than low-benefit states, as Gallaway and Vedder allege. But when we replace per capita income with median income, average family size and percent of families female-headed, the

TABLE 4*

Regressions for AFDC Families and Maximum AFDC Benefits

50 American States

1970 and 1980

Number of Families on AFDC

_ 1970 1980

Maximum AFDC Benefits -.0399 .1458* .1914* .1713* (.50) (1.9) (4.2) (3.6)

Per Capita Income .0099 --- -.0080 ---

(.99) (1.1)

Median Income -.0029 --- -.0029 (.89) (.96)

Average Family Size --- 12.01 --- 29.77 (.43) (.86)

Female-headed 1234.7* --- 177.4 (3.6) (.69)

Unemployment Rate 801.3* 616.8* 476.8* 438.7* (2.4) (2.0) (1.8) (1.7)

kParmworkers 824.3* 863.8* 56.8 185.3 (1.9) (2.2) (.10) (.29)

% Black - 20.7 -177.7* 142.2* 96.2 (.34) (2.4) (2.5) (1.2)

Population .0170* .0159* .0173* .0170* (15.6) (14.0) (19.9) (18.0)

Adjusted R2 .87 .89 .92 .92

MOTE: t-statistics are in parentheses. Constants are unreported.

* - significant at .05 level for a one-directional test.

relationship between benefits and poverty disappears. Thus whether the level of benefits is significantly related to changes in child poverty depends upon how we specify the equation. Furthermore, as in Table 2, the equations also offer evidence that economic changes, especially in the composition of the workforce, were associated with increases in child poverty, which further conflicts with a view that assigns primacy to the level of welfare benefits.

Table 4 presents regressions for the number of families on AFDC for 1970 and 1980. Three of the four equations indicate that the number of families on



Welfare 419

the rolls is significantly positively related with the level of benefits, which is consonant with Gallaway-Vedder argument. But the positive relationship between unemployment rate and the number of families on AFDC is even more consistent, holding in all four equations. And in Table 5, which examines the relationship of the 1970-1980 rate of change with average maximum benefits and our other rates of change, neither equation shows a relationship between welfare benefits and change in the number of families on AFDC. Both of these equations explain only a small proportion of the variance, and both cast serious

TABLE 5

Regressions for Change in AFDC Families and Maximum AFDC Benefits

50 American States

1970-1980

Percentage Change in Number of AFDC Families

Maximum AFDC Benefits .0008 .0002 (1.2) (.20)

Change in Per Capita Income -.4714 (.49)

Change in Median Income --- .5299 (1.6)

Change in Average Family Size --- -2.674 (.64)

Change in % Female-headed --- .7000 (.97)

Change in Unemployment Rate .2765 .2503 (1.1) (1.1)

Change in % Farmworkers -.4198* -.3114 (1.9) (1.4)

Change in % Black .3196 .2814 (.81) (.70)

Change in Population -.7854 -.7277 (1.5) (1.5)

Adjusted Red .10 .15

NOTE: t-statistics are in parentheses. Constants are unreported.


doubt on the notion that any increases in child poverty in high-benefit states were the result of increases in welfare dependency as measured by the number of families receiving AFDC.

The evidence presented in Tables 2 through 5 therefore suggests that the relationship between the level of welfare benefits and child poverty rates in the fifty states is much less pronounced than Gallaway and Vedder have claimed. We have seen that maximum AFDC benefits are negatively, not positively, associated with the percentage of children in poverty in both 1970 and 1980. They




are positively associated with changes in the child poverty rate as Gallaway and Vedder suggest when we include per capita income in our analysis, but not when we include median family income, average family size and percent of families female-headed. In addition, although states with high benefits have relatively more families receiving AFDC in three of our four cross-sectional equations for 1970 and 1980, they did not have greater increases in the number of these families than low-benefit states. Finally, economic factors, such as the unemployment rate and the percent of the workforce farm workers, are equally, if not more consistently, related to child poverty and AFDC levels than welfare benefits.

V

Conclusion

WE HAVE USED aggregate data to reassess Gallaway and Vedder's claim that there is a positive relationship between welfare benefits and increases in child poverty rates because their claim was based on such data. In so doing we have found sufficient evidence to question their assertion and to support an alternate ex- planation of child poverty which emphasizes general economic factors. We would be remiss, however, if we did not point out the limitations of using these data. Even if we had found unequivocal evidence of the relationship which Gallaway and Vedder predicted across the fifty states, it is not clear what this would say about their citizens or about the processes whereby a high level of welfare benefits would lead to increases in child poverty. With aggregate data we un- fortunately cannot reach a definite conclusion regarding this relationship. This issue can only be resolved through the use of individual-level data, and we anticipate using such data in future analyses of this topic.

Notes

1. It was an issue in the 1928 and 1932 elections, and again in 1968, 1972 and 1980 and 1984. 2. Michael Harrington, The New American Poverty (New York: Holt, Rinehart and Winston,

1984). 3. Charles Murray, Losing Ground: American Social Policy, 1950-1980 (New York: Basic

Books, 1984). 4. David T. Ellwood and Lawrence H. Summers, "Poverty in America: Is Welfare the Answer

or the Problem?" Conference on Poverty and Policy: Retrospect and Prospects, Williamsburg, Va., 1984.

5. Harrell R. Rodgers, Jr., The Cost of Human Neglect: America's Welfare Failure (Armonk, N.Y.: M. E. Sharpe, 1982); Frances Fox Piven and Richard A. Cloward, Regulating the Poor: The Functions of Public Welfare (New York: Vintage Books, 1971), The New Class War: Reagan's Attack on the Welfare State and Its Consequences (New York: Pantheon Books, 1982).

6. Sheldon Danziger, Robert Haveman, and Robert Plotnick, "How Income Transfer Programs



Welfare 421

Affect Work, Savings and the Income Distribution: A Critical Review," Journal of Economic Literature, Vol. 19 (1981), pp. 975-1028.

7. Samuel Bowles and Herbert Gintis, "The Crisis of Liberal-Democratic Capitalism: The Case of the United States," Politics and Society Vol. 11 (1982), pp. 51-94.

8. Murray, op. cit.; Martin Anderson, Welfare: The Political Economy of Welfare Reform in the United States (Stanford, Cal.: Hoover Institution Press, 1978); Lawrence M. Mead, "Social Programs and Social Obligations," The Public Interest, Vol. 69 (1982), pp. 17-33; Lowell Gallaway and Richard Vedder, " 'Suffer the Little Children': The True Casualties of the War on Poverty," unpublished paper submitted to the United States Congress, Joint Economic Committee, 1985.

9. Anderson, op. cit.; Edgar K. Browning, "How Much More Equality Can We Afford?" The Public Interest, Vol. 43 (1976), pp. 90-110; Morton Paglin, Poverty and Transfers in Kind (Stanford, Cal.: Hoover Institution Press, 1980).

10. Murray, op. cit. 11. Op. cit. 12. Op. cit.

13. Daniel Patrick Moynihan, "We Can't Avoid Family Policy Much Longer," Challenge, Vol. 28 (1985), pp. 9-17.

14. Committee on Ways and Means, U.S. House of Representatives, Children in Poverty (Washington, D.C.: U.S. Government Printing Office, 1985).

15. Murray, op. cit.: Gallaway and Vedder, op. cit. 16. Committee on Ways and Means, op. cit. 17. Leonard Hausman, "The Failure of Reform in the Entitlement System," Testimony delivered

to the Task Force on Entitlements before the House Budget Committee, 1983. 18. David T. Ellwood and MaryJo Bane, "The Impact of AFDC on Family Structure and Living

Arrangements," unpublished paper, Harvard University, 1984. 19. Op. cit. 20. John E. Schwarz, America's Hidden Success: A Reassessment of Twenty Years of Public

Policy (New York: W. W. Norton and Co., 1983), p. 177. 21. John Cogan, "The Decline in Black Teenage Employment: 1950-1970,"Amercan Economic

Review, Vol. 72 (1982), pp. 621-38. 22. Op. cit.

23. Sara McLanahan, et al., Losing Ground: A Critique (Madison, Wis.: Institute for Research on Poverty, University of Wisconsin, Special Report No. 38, 1985).

24. Sheldon Danziger and Robert D. Plotnick, "Poverty and Policy: Lessons of the Last Two Decades," Social Service Review, Vol. 60 (1986), pp. 34-51.

25. Op. cit. 26. Gallaway and Vedder, op. cit.; Murray, op. cit.; Mead, op. cit. 27. Data for our variables were derived from the following sources: (1) Maximum AFDC

benefits for 1970 are from OAA and AFDC: Standards for Basic Needs (Washington, D.C.: U.S. Department of Health, Education, and Welfare, Social and Rehabilitation Service, National Center for Social Statistics, 1971) Table 4, and maximum AFDC benefits for 1980 are from AFDC Standards for Basic Needs (Washington, D.C.: U.S. Department of Health and Human Services, Social Security Administration, Office of Policy, Office of Research and Statistics, 1981) p. 9, Table 4; (2) Child poverty rates are from U.S. Bureau of the Census, StatisticalAbstract of the United States (Wash- ington, D.C.: U.S. Government Printing Office, 1982-83) p. 443, Table 732; (3) AFDC families are from U.S. Bureau of the Census, ibid., 1971, p. 292, Table 465; 1981, p. 344, Table 561; (4) Unemployment rates are from Employment and Training Report of the President (Washington,




D.C.: U.S. Department of Labor, 1976, 1981) 1976, p. 312, Table D-4; 1981, p. 232, Table D-4; (5) Percent of the work force farm workers is from U.S. Bureau of the Census, Census of the Population: General Social and Economic Characteristics (Washington, D.C.: U.S. Government Printing Office, 1970, 1980) 1970, Table 165; 1980, Table 241; (6) Median family income is from U.S. Bureau of the Census, StatisticalAbstract, 1982-83, p. 437, Table 722; (7) Percent Black is from U.S. Bureau of the Census, State and Metropolitan Area Data Book (Washington, D.C.: U.S. Government Printing Office, 1982) p. 451, Table C; (8) Percent of families female-headed is from U.S. Bureau of the Census, Census of the Population, 1970, pp. 543-548, Table 182; 1980, pp. 345-350, Table 245; (9) Population is from U.S. Bureau of the Census, Statistical Abstract, 1985, p. 11, Table 11; (10) Average family size is from U.S. Bureau of the Census, State and Metropolitan Area Data Book, 1986, p. 511; and per capita income is from U.S. Bureau of the Census, ibid., p. 558.

28. A more common indicator of the availability of work for the poor-the percent of the workforce in manufacturing-was statistically insignificant when included in our equations.

29. Cogan, op. cit., emphasizes the decline in low-paying agricultural jobs in the South as a major reason for declines in Black teenage employment from 1950 to 1970.

30. In McLanahan etal., p. 10. 31. Rebecca M. Blank, "Where is the Money Coming From? Recent Changes in Income Patterns,"

Census Analysis Workshop: Income and Poverty, Data and Trends, Madison, Wis., 1986.

The Land Question in Central America

THE LAND QUESTION continues to dominate the politics and economics of Central America to an extent which is no longer possible in South America. The ownership and distribution of land is the primary political issue in Guatemala, El Salvador and Honduras, still of major importance in Nicaragua after the fall of Somoza, and even key in the region's most developed country, Costa Rica. Eco- nomic development in the region, rather than diminishing the importance of this issue, has intensified it. Agribusiness has given the landed oligarchy a new and growing base of economic and political power, so that land ownership still determines the relationship between the privileged and underprivileged. The historical legacy of unequal access to land hangs heavily over Central America, the fundamental barrier to social peace in the region.1

JOHN WEEKS2

Notes

1. John Weeks, The Economies ofCentralAmerica (30 Irving Place, NewYork 10003: Holmes & Meier Publishers, Inc., 1985).

2. John Weeks is professor of economics at the American University, Washington, DC. He has worked with several international development agencies as an economic adviser in Nicaragua.



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