Executive summary

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From 1980 to 2000, employment and earnings rose substantially, and by almost identical amounts, among lone mothers in Canada and the United States. As a result, low income rates among lone mothers and their children also declined over the period.

American studies have almost uniformly attributed the U.S. trend to changes in the labour market behaviour of lone mothers induced by the dramatic welfare reform associated with the Personal Responsibility Act of 1996 that made access to social assistance benefits more difficult and set time limits on their receipt.

During the 1990s, a number of Canadian provinces also introduced 'welfare-to-work' legislation and Quebec expanded employment opportunities for lone mothers by greatly expanding day-care subsidies. In an earlier study, however, we demonstrated that the Canadian trend was almost entirely due to changes in the social characteristics that condition labour force participation of lone mothers. Quite simply, the rise in employment and earnings among Canadian lone mothers can be almost entirely explained by the fact that, in 2000, Canadian lone mothers were significantly older and much better educated than they were in 1980.

The implication of these previous studies is that, while virtually identical in magnitude, the rise in lone mothers' employment and earnings in the two countries was the result of very different processes. To test this assumption, we isolate and compare the 'demographic' contribution to changes in the labour market outcomes of single mothers in Canada and the United States during the 1980s and 1990s.

We show that most of the change in employment and earnings among Canadian lone mothers was the result of changes in education and age composition but, consistent with the welfare reform thesis, this was not the case in the United States.

National differences in the demographic composition of single mothers, however, help to explain the differences in the relative importance of demographic effects in the two countries. In both countries, changes in socio-demographic composition account for most of the change among older (40 and over) lone mothers and these changes occurred mainly in the 1980s, well before the welfare reforms of the 1990s. Moreover, unlike the United States, almost all of the employment and earnings gains in Canada went to lone mothers over 40. Among younger single mothers, in contrast, employment gains in both countries occurred mainly in the 1990s and changes in 'behaviour,' not social composition, was the main reason. These results are consistent with the conclusion that, in both countries, employment gains for younger lone mothers were social policy induced. The magnitude of these effects among younger lone mothers was much larger in the United States, however, and younger women make up a much larger share of the U.S. lone-mother population.

These differences are consistent with the conclusion that welfare reform played a large role in driving up lone mothers' employment in the United States, whereas the Canadian trend was mainly demographically induced.