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Article Excerpt
This study examines the economic mobility of single mothers. It highlights the relationships between single mothers' financial assets and human capital development (educational advancement, job training, and work hours) with their economic mobility. Analysis of data from the National Longitudinal Survey of Youth (NLSY79) indicates that assets may help improve upward economic mobility. Assets, however, have differential impact on single mothers with different income levels. In addition, human capital development mediates the positive link between assets and the economic mobility for mothers living between the 100% and 200% federal poverty. These results support asset building as an investment strategy to enhance the long-term economic well-being of single mothers. The findings also underscore the importance of examining within-group variations among single mothers in designing effective asset-building policies and programs.
Key words: economic mobility, human capital, single mothers
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The rapid increase of single-mother families in the past decades and the higher poverty rates among these families have been widely recognized (Fields & Casper, 2001; McLanahan & Booth, 1989; McLanahan & Kelly, 1999; McLanahan & Sandefur, 1994; Nichols-Casebolt & Krysik, 1997). Studies also found that compared with other groups, female-headed households have experienced lower upward economic mobility (Caputo, 1999; Weinstein, 2000). These studies indicate that contributing factors to the economic hardship of single mothers include their low earning capacity, low job opportunities in economically depressed areas, and meager public benefits.
This research, however, has not paid adequate attention to the impact of assets on the economic mobility of single mothers. Interest in asset accumulation for low-income families has increased in recent years in both policy and academic discussions. Studies show that increasing asset inequality has become much more prominent than that of income (Oliver & Shapiro, 1995; Wolff, 2001). Single mothers accumulate fewer assets compared to the general population (Bernheim & Scholz, 1993; Carney & Gale, 1999; Schmidt, 2004; Yamokoski & Keister, 2004). Lack of asset accumulation may not only contribute to the lower economic status of single mothers, but, perhaps more important, restrict their economic mobility (Sherraden, 1991).
Furthermore, while theory suggests different potential pathways through which assets may enhance economic status (Sherraden, 1991; Shobe & Page-Adams, 2001), empirical research has not examined possible mechanisms by which asset holding may impact the economic success (Scanlon & Page-Adams, 2001). Studies also indicate that the impact of assets on the economic well-being of single mothers may vary by their specific life circumstances (Edin, 2001). Existing research has sparsely examined these possible differences yet.
To address these issues, this study explores the associations between financial assets and human capital development with economic mobility between 1994 and 2000. Specifically, this study seeks to answer the following research questions. First, what is the relationship between single mothers' assets and their upward economic mobility? Second, do assets impact the economic mobility of single mothers through its influence on their human capital development? Third, does the impact of assets on the economic mobility vary by the income levels of single mothers?
Understanding the dynamic relationships between assets, human capital development, and the economic status of single mothers is particularly important in the context of welfare policy. The implementation of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996 has focused on individual responsibility for long-term economic well-being. While welfare caseload has largely decreased since the welfare reform, many welfare leavers face precarious financial circumstances (Anderson & Gryzlak, 2002; Cancian, 2001; Loprest, 2001). These have led to increasing interest in investment approaches for assisting welfare recipients, and the low-income single parents in general, to enhance their economic well-being. Thus, it is necessary to understand how asset building, a promising investment strategy, impacts the economic mobility of single mothers.
Background: Theory and Past Research
Theoretical Framework
Within economic perspectives, some scholars make a distinction between income and assets as economic resources (Oliver & Shapiro, 1995; Sherraden, 1991; Wolff, 1995). These scholars indicate that the importance of assets is more than a flow of income for current or deferred consumption. Assets, as the stock of wealth in a household, can provide economic security for many families. Supporting this argument, a number of studies have found positive associations of assets with economic well-being (Page-Adams & Sherraden, 1997; Scanlon & Page-Adams, 2001).
Furthermore, assets may indirectly affect people's economic status by helping them invest in themselves and enhance their human capital development. Assets can provide security and resources for investments to improve long-term development. Assets also may enhance self-sufficiency and future orientation (Sherraden, 1991; Yadama & Sherraden, 1996; Zhan & Sherraden, 2003). For example, Yadama and Sherraden (1996) found that savings and house values had links with positive attitudes and behaviors. Some positive attitudes such as personal efficacy and future orientation may be important determinants of performance in a wide range of life events, including active engagement in long-term planning and productive activities (Bandura, 1997; Shobe & Page-Adams, 2001). A person with these qualities may want to further invest in education or skill training and pose positive work attitudes or efforts (Cho, 2001) Finally, in order to protect their existing assets, people may be more motivated to work and to improve their skills. Due to all these reasons, assets may stimulate people to engage investment and productive activities.
Based on these arguments, this study explores the direct impact of assets on the economic mobility of single mothers as well as assets' possible indirect impact through its influence on human capital development.
Assets and Economic Well-Being
In the last decade, as more attention has been given to assets as an indicator of household economic status, some studies have explored how assets are associated with the economic well-being of single-mother families. Cho (1999) found that financial assets had positive effects on the economic well-being of women after their marital disruption; financial assets were associated with increased income and reduced welfare dependency of divorced women. Rocha (1997) found that single mothers with assets (home ownership and savings) were more likely to live above the 100 percent poverty level compared with their counterparts without such assets. Raheim and Alter (1995) noted that assets appeared to increase the economic security of families on public assistance. Cheng (1995) further indicated that assets could help reduce the intergenerational transmission of poverty in female-headed households.
Assets and Human Capital Development
A few studies also have examined the impact of assets on labor force participation and educational improvement. Yadama and Sherraden (1996) found that among general population, both house values and savings were positively related to future planning activities, such as finding a new job. However, they found that assets were not related to productive...
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