Determinants of AFDC Caseload Growth. 2. Year and Seasonal Effects

07/01/1997

The estimated coefficients of the seasonal and calendar year dummies appear at the end of Exhibit 5.3. Seasonal variation in participation is much greater for the UP program than for the Basic program. As in the Basic models, conversion of the calendar year dummy coefficients to obtain annual growth not accounted for by the model's other variables is done by adding the mean of the four seasonal coefficients (zero for the first quarter) to each calendar year coefficient. This mean is -17.4 percent, i.e., -0.174 = ( 0 - 0.218 - 0.340 - 0.130)/4.

All of the calendar year coefficients are positive in the caseload equation after adjusting for the seasonal factor except five (1982, and 1991 through 1994). In all other years the adjusted coefficients are substantial positive numbers, indicating that significant growth in the caseload during this period is not accounted for by the variables in the model. The largest coefficient is for the first year, 1979, followed by the second largest in 1980 and the third largest in 1981; after adjustment these are 0.40, 0.31, and 0.24. The largest coefficient in any other year is for 1988, 0.11 after adjustment. The simulations presented later (Chapter 6) show a similar pattern of growth not accounted for, but at substantially lower levels. The difference is evidently because the model accounts for a larger share of growth in relatively large states, and these get more weight in the decomposition analysis.