Using experimental design, this research examines the impact of the nation’s first family cap policy, implemented in New Jersey, on the fertility behavior of welfare recipients. We explore whether the change in welfare parameters mandated by the policy induces differential impact among black, white, and Hispanic recipients. We examine if impacts are conditioned by racial‐ethnic group concentration. Results show that reduced welfare payments have contributed to a decline in births for black women. While we find a large response for blacks (on average), we find no response for blacks who live in geographic areas where they form a racial‐ethnic majority.