In this chapter we review relatively recent AFDC participation studies. This includes a discussion of the merits and limitations of the various econometric methodologies that have been used to study AFDC participation previously, as well as an examination of the dependent and independent variables used in the studies.
The following five methodologies, or methodological groups, are considered:
- Time-series analysis of national aggregate data;
- Time-series analysis of state aggregate data;
- Pooled (cross-section time-series) analysis of state aggregate data;
- Analysis of cross-sectional and longitudinal (panel) data for individuals; and
- Analysis of pooled (cross-section time-series) data for individuals.
An important conclusion is that the pooled analyses of aggregate state data -- the method we used in this study -- holds substantial promise relative to alternative methodologies, but also has some limitations.
In Sections B through F we describe recent studies in each of the respective methodological categories. We review program participation measures used in these studies in Section G and explanatory variables in Section H. Conclusions drawn from this literature that have influenced the specification of our model appear in Section I.