Économie et Statistique n° 429-430 - Low wages and labour market
Has the Single-Parent Allowance Encouraged Female Inactivity?
France introduced the “Single-Parent Allowance” (Allocation de Parent Isolé: API) in 1976 to alleviate precariousness due to single parenthood. For some observers, the API may have dissuaded single mothers of young children from working. We set out to confirm or disprove that hypothesis by treating the reform as a natural experiment in which we can apply the double-difference (or difference-in-differences [DD]) method. The latter consists in calculating the change in the employment rate before and after API implementation for two groups of women: an API-eligible test group (single mothers whose youngest child is under the age of 3) and a control group not concerned by the API but displaying similar characteristics (single mothers whose youngest child is aged 7-9). In our view, the difference between the employment-rate gap for the two groups before and after 1977 is attributable to the reform. By estimating a Logit model, we can test the effect of the observable differences. The model also factors in the labour-market deterioration, to which single mothers of young children have been particularly vulnerable. The estimation of the model on Labour-Force Survey data shows that the decline in the employment rate among single mothers of young children is largely due to the rise in mass unemployment. An estimation based on census data confirms this finding. As it turn out, single mothers’ labour-supply response has been weak relative to the disincentive potentially introduced by the API.