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    "ocrText": "JUL-03-2000 12:18\nOMB DEP DIR MGMT\n202 395 6974 P.18/37\nof our test we combine several measure of family background to create an index of family\nbackground and interact that with experience. SES1 is created by regressing schooling on\nfathers education, mothers education, and number of siblings, and creating a predicted\nvalue. SES2 is created by including family income in the regression as well. There is no\nevidence that family background is related to wage growth.\nAs discussed above, looking at interactions between welfare receipt and wage growth\nis problematic since welfare receipt is endogenous to wage growth and since the sample\nselection problem is likely to be substantial for this group. We run these regressions to\ndocument the results, but one must be very careful in interpreting them. Using data\nfrom the Panel Study of Income Dynamics, Moffitt and Rangarajan(1989) presents some\nevidence that mothers who are typical welfare recipients have steeper wage growth than\ntypical non-recipient, but warns of selection bias. Burtless(1994) looks at the return to\npotential experience and finds that wages grow more slowly for welfare mothers than others.\nLooking at actual experience, we find similar results to Moffitt and Rangarajan(1989).\nTable 4 presents results using the same specification as in Table 3, but estimating only\non women. The results indicate that welfare recipients actually have higher levels of wage\ngrowth than other workers. White women who experience a welfare spell at some point\nhave wage profiles that are approximately 5.2% steeper then other workers. This effect\nis somewhat more pronounced for whites then blacks, but the difference between welfare\nmothers and others is substantial.\nGiven that our results are only partially robust to time trends, we next use the Current\nPopulation Survey data to look at the effect of the schooling/experience interaction on\nwage growth. These results are presented in Table 5. We construct the actual experience\nmeasure as discussed above. It is important to recognize that this measure is imperfect for\na number of reasons. As mentioned above, the primary problem is that the group of people\nwho belong to one group at one point in time might not belong to that group at another.\nThis arises when thinking about both labor supply and schooling. When we construct the\naverage experience for 21 year old high school graduates, some of those individuals will\nattend college eventually. Ideally we would not want to include these 21 year olds when we\nconstruct the actual experience for 25 year old high school graduates, but we can not avoid\nthis problem since we do not know who will attend college. We have a similar problem with\n14"
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