The effects of welfare and child support policies on union formation

We use data from a new longitudinal survey – the Fragile Families and Child Wellbeing Study – to examine how welfare and child support policies, and local labor market conditions, affect union formation among unmarried parents who have just had a child together. We use multinomial logistic regression to estimate the effects of the policy variables along with economic, cultural/interpersonal, and other factors on whether (relative to being in a cohabiting relationship) parents are not romantically involved, romantically involved living apart, or married to each other about one year after the child's birth. We find that – contrary to some previous research – higher welfare benefits discourage couples from breaking up, while strong child support enforcement reduces the chances that unmarried parents will marry; local unemployment rates do not appear to be strongly associated with union formation decisions after a nonmarital birth.     

The effectiveness of monetary policy in small open economies

This paper examines the relative effectiveness of the use of direct and indirect monetary policy instruments in Barbados, Jamaica and Trinidad and Tobago, by estimating a restricted Vector Autoregressive model with Exogenous Variables (VARX). The model captures the dynamic interaction of the key sectors in the economy and it accounts for the fact that the banking system in those countries is characterized by high levels of excess reserves. Also, the study assumes that the central bank conducts monetary policy using a Taylor-type rule, and it evaluates the effects of a reserve requirement policy. The results show that although a positive shock to the policy interest rate has a direct effect on commercial banks’ interest rates, there is a weak transmission to the real variables. Furthermore, an increase in the required reserve ratio is successful in reducing private sector credit and excess reserves, while at the same time alleviating pressures on the exchange rate. The findings therefore indicate that central banks in small open economies should consider using reserve requirements as a complement to interest rate policy, to achieve their macroeconomic objectives.     

The effects of welfare and child support policies on union formation

We use data from a new longitudinal survey – the Fragile Families and Child Wellbeing Study – to examine how welfare and child support policies, and local labor market conditions, affect union formation among unmarried parents who have just had a child together. We use multinomial logistic regression to estimate the effects of the policy variables along with economic, cultural/interpersonal, and other factors on whether (relative to being in a cohabiting relationship) parents are not romantically involved, romantically involved living apart, or married to each other about one year after the child's birth. We find that – contrary to some previous research – higher welfare benefits discourage couples from breaking up, while strong child support enforcement reduces the chances that unmarried parents will marry; local unemployment rates do not appear to be strongly associated with union formation decisions after a nonmarital birth.