Marriage, Penalized: Does Social-Welfare Policy Affect Family Formation?
Today, more than four in ten families in America receive some kind of means-tested government assistance, from Medicaid to food stamps. The expanding reach of the welfare state means that a substantial share of lower-middle-class couples with children receive such aid—and many of these couples receive more generous support if they are unmarried. That’s especially the case if their total income as a cohabiting couple is not considered in determining their eligibility for assistance, as often appears to be the case. To use the term of public policy analysts, these couples face a “marriage penalty,” where it makes more financial sense for them to cohabit rather than marry. The authors’ analysis of American couples whose oldest child is two years or younger indicates that 82 percent of those in the second and third quintiles of family income ($24,000 to $79,000) face this kind of marriage penalty when it comes to Medicaid, cash welfare, or food stamps. By contrast, only 66 percent of their counterparts in the bottom quintile (less than $24,000) face such a penalty.