Does income support increase abortions?

Currently, Temporary Assistance for Needy Families (TANF) programs in 32 American states allow low-income childless pregnant single women (CPSW) to receive monthly cash assistance, while 28 states and the District of Columbia use lump-sum payments to divert low-income families from TANF. Past research has not investigated the possible consequences on abortions of these two welfare policies. We construct a theoretical model of low-income CPSW to investigate them. The results of the theory yields the following hypotheses: (1) diversion payments to low-income mothers lower abortion incidence; and (2) diversion payments and CPSW eligibility together raise abortion incidence. We use data from the US Centers for Disease Control and Prevention's Abortion Surveillance, and a system GMM dynamic panel, two-way fixed-effects empirical model to test our hypotheses. Our empirical results provide statistically significant evidence for the first hypothesis, but not the second. © Springer-Verlag 2009.