Determinants of AFDC Caseload Growth. b. Dummy Variables for Other Program Features

07/01/1997

The Unemployed Parent Program

The introduction of the Unemployed Parent (UP) program in a state may reduce participation in the Basic program. It may also reduce the sensitivity of participation in the Basic program to changes in the labor market -- in the absence of the UP program, the best option for a pair of unemployed parents may be to not marry, or to get divorced, so that the mother and children can obtain Basic benefits.

In addition, the length of UP program benefits may have a significant impact on participation in the both programs. FSA88 requires that states provide benefits for a minimum of sixth months per year; many states, however, provide benefits for the entire year, and states with 12-month programs before October 1, 1990 were required to continue 12-month programs under FSA88.

To gauge the effects of both the existence and the length of UP programs, we include two separate dummy variables in our Basic models: UP12M and UP6M. UP12M, is equal to one in those quarters during which a state administers an UP program with no time-limited eligibility; otherwise, it is equal to zero. Similarly, UP6M is equal to one in those quarters during which a state administers an UP program limiting eligibility to six months out of every twelve months and equal to zero elsewhere.

It is possible that UP programs introduced in 1990 under Federal mandate have different impacts on participation than those introduced voluntarily by states in earlier years, holding the months of coverage constant. States may, for instance, introduce a Federally mandated program in a way that minimizes its fiscal impact on the state's budget, whereas states may place more weight on other objectives in implementing a voluntary program. Hence, we define a third UP dummy, UP90, to distinguish programs that were introduced in the fourth quarter of 1990, under the Federal mandate, from others.

Implementation of New Federal Requirements

Changes were made in federal AFDC requirements under each of the following acts during the 1980-95 period: the Omnibus Budget Reconciliation Act of 1981 (OBRA81), the Deficit Reduction Act of 1984 (DEFRA84), OBRA87, the Family Support Act of 1988 (FSA88), OBRA90, and OBRA93 (Committee on Ways and Means, 1994).

To some extent, the effects of these changes in Federal requirements are captured through changes in the program parameter variables - especially the ATBRR and CUTGIL. Furthermore, the methodology used to model the UP program also captures one of the major changes mandated by FSA88. Other provisions of these acts, especially the JOBS program and the Medicaid and child care expansions mandated by FSA88, are not, however, captured in these variables. The year dummies may also capture some of the effects of these acts to the extent that the effects are proportional and contemporaneous in all states. Recall, however that the year dummies are constrained to be the same in each quarter of the year, so their ability to capture the proportional, contemporaneous effects of a requirement that is implemented in a specific quarter is limited.

We experimented with nine different dummy variables related to federal AFDC requirements. They are:

1. OBRA81;

2. DEFRA84;

3. OBRA87;

4. MEDCCXPN, for effects of transitional Medicaid and child care expansion provisions in FSA88;

5. JOBS, for effects of implementation of state job programs;

6. FSAUP1, for effects of FSA88 provisions requiring states implement UP programs;

7. FSAUP2, for effects of work and educational program requirements in FSA88 for UP families;

8. OBRA90, for the exclusion of any children receiving foster care maintenance or adoption assistance payments from the AFDC assistance unit mandated under OBRA90; and,

9. OBRA93.

Details for each variable appear in the Appendix. With two exceptions, all of these variables change from zero to one in a specific quarter in all states -- the quarter of implementation. The first exception is JOBS which changes from zero to one in the quarter during which a state initiated its JOBS program. The second exception is FSAUP1 which changes from zero to one in 1990.4 for states with no UP program before the federal mandate. FSAUP1 equals zero throughout for those states with UP programs before October 1990. We experimented with lagged specifications for some of these variables, on the assumption that the full impact of implementation on participation or average monthly benefits did not occur in the first quarter of implementation.

Waivers

Many states have obtained and implemented waivers to federal rules under Section 1115 of the Social Security Act ("1115 Waivers") during the period under investigation, especially during the last few years. Based on descriptions of all waivers granted during this period provided by ACF, we identified those waivers that were both implemented for a large share of the state's population at some point during the sample period and expected to have an impact on participation and/or average monthly payments.(14) We have grouped these waivers into five categories based on the provisions of the waivers, and have created a dummy variable to capture them:

  • NOKIDS is a dummy for waiver provisions reducing or eliminating AFDC benefits for children born or conceived while the family is receiving AFDC;
  • WORKREQ is a dummy for waiver provisions requiring AFDC recipients to engage in work, education, or training activities outside of those under the state's JOBS program;
  • MEDEXPAN is a dummy for waiver provisions extending transitional Medicaid benefits for an additional one to two years;
  • UP100 is a dummy for waiver provisions eliminating the 100-hour work limitation rule for AFDC-UP eligibility; and
  • UP100WH is a dummy for waiver provisions eliminating both the 100-hour work limitation rule and the work history requirement for AFDC-UP eligibility.

The dummy for a particular waiver equals one in each state that implements the waiver (sometimes just one state) for all quarters from the first quarter of implementation in the state forward, and is zero for all earlier quarters; the dummy's value is zero in all quarters for all other states. This specification assumes a once and for all proportional change in participation and/or average monthly benefits as the result of the waiver. We also experimented with lagged values of the dummies to allow for transitional effects. See the Appendix for further details.