Philip T. Ganderton, Ph.D.
Department of Economics
University of New Mexico
Patricia T. Montoya, R.N., M.P.A.
Fredrick Sandoval, M.P.A.
Gary L. J. Girón, M.B.A.
Joyce Naseyowma-Chalan, M.P.H.
New Mexico Department of Health
Public Health Division
Family Planning Program
PO Box 26110
Santa Fe, NM 87501
Funded by the NM Department of Health
• Public Health Division
Title X Family Planning Program, DHHS
Impact Study for complete data.
estimates the economic impact of teenage family formation in New Mexico. A
previous study estimated the value of public program expenditures on
households formed by teenagers at $88 million in 1990. An update of this
estimate is both timely and responds to the needs of the New Mexico
Department of Health’s Action Plan outlined in New Mexico’s Teen Pregnancy
Coalition publication “Bridging Our Past, Present and Future” published in
study uses the solid theoretical foundation provided by the discipline of
economics to identify the nature of the impacts caused by early family
formation, the methods needed to measure those impacts and a means to
allocate these impacts among the various elements in society. In
particular, the study measures the impact of teenage childbearing on three
groups: the teenage parents and their children, taxpayers who support many
public assistance programs providing benefits to these families, and
society as a whole.
pregnancy and childbirth has many consequences both positive, such as the
joy of bringing new life into the world and becoming a parent, and
negative such as a higher risk of low birth weight babies and delayed
completion of high school. Unfortunately, as is well documented
elsewhere, most of these consequences are negative and the plight of
teenage mothers, their spouses and their children is certainly dismal.
While recognizing the importance of all the impacts of teenage parenting,
this study concentrates on the measurable economic consequences of
families formed by teenagers.
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Methods and Data
The economic impact of early
childbearing on families formed by teenage mothers is compared to that of
women who delay childbirth until after their teens; in this case, first
time mothers aged 20 and 21 make up the reference group. Lack of data
limits the method to measuring a gross difference in economic outcomes for
women who gave birth as teenagers and women who delayed until age 20 or
21, rather than being able to control for those factors that differ
between these cohorts of women separate from, but related to, their
natality. Reference to a national study of young teenage childbearing
conducted in 1996 provides adjustments for these limitations when
groups the measurable economic impacts of teenage into three broad
income-related effects, measuring the impact on teenage parent earnings
and the taxes they pay on those earnings due to early parenting rather
than delaying having children.
assistance impacts, including the major programs that provide benefits
to teenage families: Medicaid, TANF, WIC, food stamps and housing
subsidies. The majority of these expenditures represents transfers from
taxpayers to program beneficiaries and is of great importance to policy
makers and those responsive to tax-paying constituents; and
affecting the children born to teenage mothers, including such outcomes
as being more likely to be placed in foster care, more likely to be
incarcerated, and more likely to be less educated and less productive
throughout their working lives.
availability of data determines what values can be estimated and the
accuracy of those estimates. Sufficient information to calculate many of
the economic impacts came from a number of sources both inside and outside
New Mexico. Unfortunately, much of the relevant data remains unavailable
or uncollected. This study uses available data from New Mexico, and only
when no alternative exists does the study employ data from outside the
state. The final estimates match well with those produced by other
studies, thereby increasing confidence in the methods used and the
uses 2000 as the reference year for most calculations since this is the
most recent year for which nearly all data are available. This increases
the study’s internal compatibility and external comparability. The study
also uses the Consumer Price Index to express all dollar values in year
2000 terms. Since many cohorts of teenage parents co-exist in any one
year, the accounting method creates multiple separate cohorts, all based
on the 2000 cohort, but each one year further into parenting. This design
captures the total effect of teenage family formation in one year to make
calculating annual impacts simpler.
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Estimating Economic Costs
family as a teenager has a large negative impact on one’s own earnings and
those of the spouses, if married, compared to women who delay childbirth.
However, these families receive considerably more public assistance
compared to older parents. Published research reveals that nearly all
this negative impact is due to factors other than childbirth, that
describe the socio-economic conditions that lead teenage women to get
pregnant and form families. The gross difference between the economic
outcome for households headed by teenage parents and those headed by women
who delay childbirth until age 20 or 21 is estimated at $12,305 annually
Public assistance to
families formed by teenagers in New Mexico creates a gross burden to
taxpayers of nearly $300 million dollars annually over the burden created
by families formed by women who delay childbirth. This represents a tax
cost of $6,176 per year per teenage mother. Taxpayers could avoid about
one-third of this burden if teenage women delayed childbirth, but the
influence of all the underlying socio-economic factors must be offset to
realize the full tax savings measured. The majority of tax savings would
go to New Mexico taxpayers.
While the teenage parents
and taxpayers are important constituents to identify separately in the
analysis, the overall impact of families formed by teenagers falls on
society as a whole. The gross gain in economic well-being if teenagers
were to delay parenting until at least age 20 or 21 is over $500 million
annually measured in 2000 dollars. This represents an economic loss of
$11,350 per teenage mother per year. Reducing teenage childbirth in New
Mexico to zero, but not addressing the underlying socio-economic factors
related to teenage pregnancy and childbirth would realize an annual gain
to society of $216 million. The majority of these gains would accrue to
New Mexico residents.
If successful, the New
Mexico Department of Health’s Challenge 2005, to reduce births to teens by
20 percent by 2005 would save New Mexicans about $43 million annually.
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