Determinants of AFDC Caseload Growth. 3. Demographic Variables

07/01/1997

Population Growth and Aging

 

We did not include a variable for population growth and aging in the AMB equation.

Exhibit 5.5

Average Monthly Benefit Regression Results
Sample: 51 states, 1980.2 - 1993.3
Dependent Variable is Change in ln(average monthly benefit)
Explanatory        
Variables c   Lag Coefficient T-statistic b
ln(unemployment rate) 100xa0   0.656 3.7
(PDL: L = 14) a 100xa1   -0.338 -6.6
  1000xa2   0.223 6.7
  long run elasticity   -0.030  
ln(trade employment per cap.) a0   0.127 14.7
(PDL: L = 10) a 10xa1   -0.615 -24.9
  100xa2   0.410 13.4
  long run elasticity   -0.406  
ln(maximum monthly benefit) current   0.663 73.0
  1st lag   -0.085 -9.9
  2nd lag   0.018 2.0
  sum   0.596  
average tax and benefit current   -0.133 -8.8
reduction rate 1st lag   -0.142 -9.4
  2nd lag   0.166 11.3
  sum   -0.109  
AFDC earnings cut off current   -0.026 -3.7
relative to gross income limit 1st lag   -0.003 -0.5
  2nd lag   0.059 8.8
  sum   0.030  
OBRA81 current   0.080 9.9
  1st lag   0.038 4.8
  2nd lag   -0.061 -7.4
  sum   0.056  
DEFRA84 current   -0.008 -1.6
         
6-month UP program current   0.035 4.6
12-month UP program current   0.013 4.5
UP started in 1990.4 current   -0.038 -5.8
         
family cap 1st lag   0.055 3.5
IRCA immigrants per 100 1st lag * 0.007 1.4
ln(out-of-wedlock births) d * 0.074 3.6
ln(% insured unemployed) 1st lag   0.032 8.0
abortion: parental consent/notice. 1st lag   -0.015 -6.8
Medicaid restricted 1st lag   -0.016 -7.5
         
Spring     -0.036 -4.8
Summer     0.094 13.8
Fall     0.086 10.5
         
Calendar year 1980   -0.077 -9.1
  1981   -0.064 -5.7
  1982   -0.022 -2.3
  1983   -0.048 -6.0
  1984   -0.041 -4.4
  1985   -0.028 -3.3
  1986   -0.049 -6.0
  1987   -0.039 -4.9
  1988   -0.052 -6.5
  1989   -0.052 -6.5
  1990   -0.056 -6.8
  1991   -0.055 -6.7
  1992   -0.050 -6.1
  1993   -0.053 -4.7

a For the polynomial distributed lag (PDL) variables, the coefficient of the variable lagged j periods is a0 + a1 j + a2 j2 for j = 0, 1, 2, ... L. Other variables are lagged the number of periods indicated.

b. T-statistics in bold are at least 2.0 in absolute value.

c. All explanatory variables except quarter and year dummies are changes. Quarter and year dummies are equal to .25 in the quarters/years indicated so that coefficients can be interpreted as annualized rates of growth.

d Variables are moving averages of previous four quarters.

Vital Statistics

Only one of the vital statistics variables, out-of-wedlock births, appears in the final AMB specification and it has a significant, positive coefficient. More out-of-wedlock births among existing AFDC families would be expected to increase AMB, but families entering the caseload as the result of a first out-of-wedlock birth would presumably receive lower than average benefits.

Immigration

The IRCA legalizations variable appears in the final specification with a positive, but insignificant, coefficient. The positive coefficient seems at odds with the hypothesis that the large coefficients on this variable in the Basic participation models reflects child-only families; presumably such families would receive lower than average benefits unless the average number of children in such families is substantially larger than average.