- Adolescents ’ School Enrollment and Employment : Effects of State Welfare Policies

In this study we test the hypothesis that stringent state welfare policies promote adolescents’ enrollment and reduce their employment. The underlying mechanisms operate in the larger society, the local labor market and the family, particularly for adolescents from low-income families. We use static and dynamic models and separate out welfare policies from non-welfare state policies, youth-specific state labor market conditions, and unobserved state characteristics and period effects. Using longitudinal data from the NLSY97 on adolescents aged 14-19 and data on state welfare policies over the period 1994 through 2000, we find that welfare reform change the behavior of teenage students by encouraging full engagement in schooling and reducing employment while in school. If focusing entirely on schooling is the best way for lowincome youth to build human capital, these possible effects of welfare reform could be beneficial. If, however, low-income youth obtain “soft skills” from a formal job and if “soft skills” turn out to be decisive for low-income youth’s economic future, these welfare policy effects could be harmful. In addition, stringent state welfare policies appear to have a detrimental effect on teenage dropouts from low-income families.