AFDC and illegitimacy ratios: a vector-autoregressive model

The expansion of the government programme of Aid to Families of Dependent Children (AFDC) plays a major role in theoretical explanations of the sharply rising trend in US illegitimacy ratios–the proportion of births occurring to unwed mothers. To date, this role has not been supported by empirical evidence. The present study uses a new approach: time-series data and Granger causation. A series of tests shows robust causal impacts of AFDC on non-white illegitimacy ratios. A counterfactual simulation reveals that about half the increase in non-white illegitimacy ratios over the past two decades can be attributed to an ‘AFDC effect’.