J Popul Econ 2000) 13: 569±594 999 2000 Welfare generosity, pregnancies and abortions among unmarried AFDC recipients Laura M. Argys1, Susan L. Averett2, Daniel I. Rees1 1 University of Colorado-Denver, Department of Economics, CB 181, P.O.Box 173364, Denver, CO 80217-3364, USA Fax: 1-303-556-3547; e-mail: largys@castle.cudenver.edu; drees@carbon.cudenver.edu) 2 Lafayette College, Department of Economics and Business, Easton, PA 18042-1776, USA e-mail: averetts@lafvax.lafayette.edu) Received: 16 April 1998 / Accepted: 11 March 1999 Abstract. Even before the 1996 overhaul of the U.S. welfare system, a number of states had ended the practice of paying extra bene®ts to families who have additional children while receiving welfare. Proponents believe that this reform can reduce births to recipients, however many worry that it may encourage women to obtain abortions. Using a sample of unmarried AFDC recipients from the NLSY, we estimate a bivariate probit model of pregnancy and, conditional on becoming pregnant, the probability of abortion. Our results lend some support for the proposition that reducing incremental AFDC bene®ts will decrease pregnancies without increasing abortions. JEL classi®cation: I38, J13 Key words: Welfare, abortion, fertility 1. Introduction The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 gave states wide latitude to create and administer their own welfare programs. But even before the passage of this act a number of states had begun to experiment with reforming the welfare system under waivers from the Federal government. One of the most controversial of these reforms was All correspondence to Laura M. Argys. The authors wish to thank Stanley Henshaw, Terra McKinnish and Seth Sanders for assistance in obtaining data on the number of abortion providers by state, Bill Greene for assistance with marginal bivariate probit calculations, Jennifer Giellis for excellent research assistance, and two anonymous referees for helpful comments and suggestions. Responsible editor: John F. Ermisch.