PIP: This paper develops and tests a three-stage nested logistic model of teenage childbearing that is influenced by economic incentives and costs created by US public policy. The modeling of teenage childbearing involves becoming pregnant, the choice to have an abortion or to bear the child, and the choice to bear the child premaritally or maritally. Data were obtained from a sample of 1718 Black and White women aged 14-16 years in 1979 from the National Longitudinal Survey of Youth. In 1990, the birth rate among unmarried youth was 29.5/1000 unmarried White women vs. 110.1/1000 unmarried Black women. In the sample, the pregnancy rate was 24% among White teenagers and 48% among Black teenagers. Miscarriages or stillbirths occurred among 11% of Whites and 12% of Blacks. Abortions were performed for 37% of Whites and 12% of Blacks. An incentive variable is the welfare guarantee. Cost variables include the cost of obtaining an abortion and the cost of obtaining contraceptive services and supplies. Access to family planning services is also accounted for in the model. Findings indicate that welfare, abortion, and family planning policy variables have a racially specific impact. For White teenagers, these variables have significant effects on pregnancy outcomes. For Black teenagers, the insignificance may reflect differences in sample size or important unmeasured racial differences in factors that influence fertility and marital behavior. The authors suggest that the rational choice perspective does not adequately explain premarital childbearing. It is also suggested that the specification of the variables on abortion, family planning, and adolescent sexual behavior may be fundamentally different and reflect differences in state attitudes and social customs. Only if the policy variables really change the costs of different pregnancy outcomes will changes in social policy change individual adolescent behavior. The authors state that focusing on only economic incentives did not rule out other influences on premarital childbearing.