This paper uses longitudinal data on nearly 500 minority mothers living in an innercity neighborhood of Chicago to study the role of illicit drugs as a potential barrier to economic self-sufficiency. The analysis employs information collected during the last trimester of pregnancy and one year after the birth of the child. Logit regressions that control for a rich set of human capital and demographic characteristics reveal that illicit drug use in the months before the pregnancy is associated with a large increase in the likelihood of welfare reliance one year later. Other models, focusing on a drug addiction problem as measured by very frequent drug use before the pregnancy or any use during the pregnancy, yield even more pronounced effects, a result that is robust to a different specification that treats this variable as endogenous.
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