Determinants of AFDC Caseload Growth. Notes


1. The model discussed is an update to the model described in CBO (1991). CBO staff have informed us that the CBO (1993) study has not been updated and that there are no immediate plans to update it in the future.

2. An analysis of Basic openings and closings appears in the appendix to CBO (1993). We discuss this analysis further in Section III.

3. Specifically, the disturbance term is assumed to have a "second-order autoregressive regressive" structure -- the current quarter's error is a linear function of the errors in the previous two quarters, plus a random error.

4. This variable is defined as the number of families headed by women with their own children under age 18, multiplied by the ratio of never-married mothers to ever-married mothers.

5. This discussion refers to the equation reported by Grossman (1985) in Table V.4. A latter specification omits some of the explanatory variables because forecasts of the omitted variables are not available.

6. The CBO sample period includes the entire sample period used by Grossman, plus an additional period of almost the same length (73 quarters for CBO versus 37 for Grossman).

7. An ARIMA model is an autoregressive integrated moving average specification--such data series are not stationary and differencing is required to convert them into a stationary series (an ARMA model) that can be modeled.

8. The Maryland model defines the real average monthly wages after taxes for the at-risk population as the average monthly wages of females in low-wage, female dominated industries (i.e., industries in which females represent at least 40% of the total work force) adjusted for the EITC, FICA, state income tax, and food stamp benefits.

9. Washington's FIP is virtually identical to the 1990 Family Support Act which created the JOBS program.

10. The requirement referenced is the stipulation that a household must have an income that is less than or equal to 150 percent of the state's standard of need before deductions -- known as the "150 percent rule."

11. We note that Grossman uses the level of unemployment in place of the unemployment rate in order to solve this scale problem for the unemployment variable.

12. Additional equations for Medicaid enrollees who are SSI recipients and "non-cash" Medicaid enrollees are also estimated.

13. The South dummy is omitted from the model with state fixed effects because that model already includes a dummy variable for each state.

14. See Moffitt (1992) for a review.

15. Fitzgerald estimates a hazard model of exits from AFDC. Using the results of his model, he simulates average survivor functions at 6, 12, and 24 months for particular variables, holding all other variables constant at their mean values.

16. See, for example, Blank and Ruggles (1996) and Hoynes and McCurdy (1994).

17. The categories of marital status used in this study are never married, divorced, widowed, and separated/other. Living arrangements are categorized as independent families, extended families, cohabiting with a single, unrelated adult male, and unrelated families.

18. Based on a phone conversation with Herbert Lieberman of the Office of Family Assistance in the Agency for Children and Families.

19. This type of variable, one that expresses earnings relative to AFDC benefits, is discussed further in the next section.