Determinants of AFDC Caseload Growth

by David Stapleton, Ph.D., Gina Livermore, Ph.D. and Adam Tucker of The Lewin Group, Inc., for the Office of the Assistant Secretary for Planning and Evaluation, Department of Health & Human Services, July 25, 1997. Kelleen Kaye and Gilbert Crouse were the Project Officers.

Table of Contents

EXECUTIVE SUMMARY

A. BACKGROUND AND PURPOSES

B: KEY FINDINGS

C: RESEARCH IMPLICATIONS

CHAPTER ONE: INTRODUCTION AND SUMMARY

A. BACKGROUND AND PURPOSES

B: NATIONAL CASELOAD TRENDS

C: CONCEPTUAL FRAMEWORK

  1. The Participation Decision and Other Choices
  2. The Budget Contraints for an AFDC Family
  3. Other Program Factors

D. OVERVIEW OF THE MODEL

E. SUMMARY OF THE FINDINGS

F. RESEARCH IMPLICATIONS

G. FUTURE WORK

CHAPTER TWO: REVIEW OF THE LITERATURE

A. INTRODUCTION

B. NATIONAL TIME SERIES

C. INDIVIDUAL STATE TIME SERIES

  1. Overview
  2. State Models

D. POOLED CROSS-SECTION TIME-SERIES: STATE AGGREGATES

  1. Introduction
  2. Previous AFDC Studies
  3. Strengths and Weaknesses of the Pooled Approach

E. CROSS-SECTIONAL AND PANEL STUDIES OF MICRO DATA

F. POOLED CROSS-SECTION TIME SERIES: MICRO DATA

G. PARTICIPATION MEASURES

H. EXPLANATORY VARIABLES

  1. Demographic Factors
  2. Labor Market and Economic Factors
  3. AFDC Program Variables
  4. Other Variables

I. CONCLUSIONS

  1. Substantive Issues
  2. Technical Issues

CHAPTER THREE: METHODOLOGY

A. INTRODUCTION

B. ECONOMETRIC MODELS

C. MODELING CHANGES IN THE AGE DISTRIBUTION OF THE POPULATION

  1. "Expected" Participation
  2. Age-adjusted Explanatory Variables

D. MODELING DELAYED IMPACTS

E. CONVERTING ANNUAL SERIES TO QUARTERLY SERIES

F. SIMULATIONS

CHAPTER FOUR: VARIABLE SPECIFICATIONS

A. INTRODUCTION

B. DEPENDENT VARIABLES

C. EXPLANATORY VARIABLES

1. Demographic Variables

a. Population Characteristics

b. Vital Statistics

2. Labor Market Variables

3. AFDC Program Variables

a. Program Parameters

b. Dummy Variables for Other Program Features

4. Other Program Variables and State Laws

a. Medicaid

b. General Assistance

c. Supplemental Security Income

d. SSA Allowance Rates

e. Unemployment Insurance

f. Child Support Enforcement Laws

g. Restrictions on Abortions

CHAPTER FIVE: REGRESSION RESULTS

(This chapter has been divided into two files in order to improve the downloading time.)

A. INTRODUCTION

B. BASIC PARTICIPATION EQUATIONS

1. Determining the Final Specifications

2. Year and Seasonal Effects

3. Demographic Variables

4. Labor Market Variables

5. AFDC Program Variables

6. Other Programs and Laws

7. Weighted Least Squares Results

C. UNEMPLOYED PARENT PARTICIPATION EQUATIONS

1. Determining the Final Specifications

2. Year and Seasonal Effects

3. Demographic Variables

4. Labor Market Variables

5. AFDC Program Variables

6. Other Programs and Laws

7. UP Results for 1991 - 1994

D. AVERAGE MONTHLY BENEFIT EQUATION

1. Determining the Final Specification

2. Year and Seasonal Effects

3. Demographic Variables

4. Labor Market Variables

5. AFDC Program Variables

6. Other Programs and Laws

E. FURTHER DISCUSSION OF BUSINESS CYCLE ESTIMATES

1. The Dynamic Effects of an Unemployment Rate Increase

2. Comparison of Business Cycle Effects to Findings in Previous Studies

F. FURTHER DISCUSSION OF PROGRAM PARAMETER EFFECTS

CHAPTER SIX: SIMULATIONS

A. INTRODUCTION

B. NATIONAL SIMULATIONS

1. Basic Caseload

2. Unemployed Parent Caseload

3. Average Monthly Benefits

C. SIMULATIONS FOR SELECTED STATES

1. California

2. Florida

3. Maryland

4. Wisconsin

D. SUMMARY AND DISCUSSION

1. Basic Caseload

2. Unemployed Parent Caseload

3. Average Monthly Benefits

4. Conclusion

REFERENCES

APPENDIX A: VARIABLE DEFINITIONS

Acknowledgements

This study has greatly benefitted from the assistance and comments provided by many people. Foremost among these are the Project Officers for the Office of the Assistance Secretary for Planning and Evaluation (ASPE), Kelleen Kaye, and Gilbert Crouse. Other government staff who contributed substantially to this effort are former Deputy Assistant Secretary for Human Services Policy, Wendell Primus, Leonard Sternbach (Administration for Children and Families), and Donald Oellerich (ASPE).

We are also are especially grateful to Professor Robert Moffitt (the Johns Hopkins University), who reviewed our analysis plan and provided several helpful suggestions, and for the reviews of preliminary findings provided by five experts on the history of AFDC caseloads in the states we selected for case study: Dr. Thomas Corbett, the Associate Director of the Institute for Research on Poverty at the University of Wisconsin-Madison; Werner Schink, Chief of the Research Branch of the California Department of Social Services; Dr. Steven Thompson of the Regional Economic Studies Institute of Towson State University, Maryland; Donald Winstead, the Welfare Reform Administrator for Florida's Economic Services Program; and Professor Michael Wiseman of The Robert M. La Follette Institute of Public Affairs at the University of Wisconsin-Madison.

We also received many helpful comments on our preliminary findings from participants at the RAND conference on "New Advances in Welfare Research," (Santa Monica, CA, September 10-21, 1996). Finally, we greatly appreciate the assistance provided by many anonymous individuals in collecting the data and other information that were instrumental to the success of this project.