For an article that questions the view that subsidies to illegitimate childbearing do not explain changes in illegitimacy rates, see Margaret F. Brinig and F.H. Buckley, The Price of Virtue, 98 Public Choice 111 (1999). (The link is to a downloadable version of the article in rtf format, not to a web page). The authors find that the average monthly payout per family under the Aid for Families with Dependent Children program has a significant positive relation to illegitimacy rates, when they control for a variety of other relevant factors.

They point out that during the 80's, when real AFDC payments were falling, other subsidies were rising:

"Real per capita state and local public welfare expenditures (excluding education, health and hospitals) increased from $209 in 1980 to $276 in 1989. Real payouts also increased under federal and joint federal-state programs such as food stamps, school lunches, supplemental security income, and Medicaid. These increases largely offset AFDC cuts."