Studies of Welfare Populations: Data Collection and Research Issues. Regression Results

06/01/2002

The final question of the chapter is whether characteristics of AFDC recipients vary significantly by N or L, holding T fixed--that is, those with high or low turnover differ in their characteristics if they have the same total-time-on--and whether the differences we have noted between short-termers, long-termers, and cyclers are statistically significant.

Table 14-5 shows the results. Each of the four key labor market characteristics--the employment rate, annual earnings, weekly wages, and the hourly wage, all measured only over periods off AFDC--is regressed, in the first case, on T and N, or on T and L (all three are not included in the same equation because they are definitionally related to each other) and, in the second case, on dummies for long-term and short-term status, with the cycler group omitted. The regressions involving T, N, and L show that T is a strong and statistically significant determinant of labor market characteristics, in the expected direction (higher T is associated with lower employment rates, earnings, and wages). However, the coefficients on N and L are mixed in their significance and their sign. Greater N and lower L are significantly correlated with higher employment rates off AFDC but lower wage rates. They are insignificantly related to earnings, which is the product of employment and wage rates, no doubt because the two operate in opposite directions and cancel out. The more appropriate indicators of earnings potential are the wage rate effects, and here the results change the impression taken from Table 14-2 that those with longer spells have lower wage rates; controlling for total-time-on, they have higher wage rates, an unexpected finding.

TABLE 14-5
Regressions of Labor Market Characteristics on Welfare Participation Indicators
  Employment Rate(a) Annual earnings (including zeroes) Weekly Wages Hourly Wages
T -.348*
(.056)
-.173*
(.083)
-- -48.0*
(8.4)
-53.1*
(12.6)
-- -.578*
(.221)
-.1.35*
(.32)
-- -.012*
(.006)
-.038*
(.009)
--
N 2.94*
(1.45)
-- -- -169.7
(219.5)
-- -- -11.9
(5.14)
-- -- -.347*
(.141)
-- --
L -- -.247
(.119)
-- -- 5.2
(18.0)
-- -- 1.13*
(.47)
-- -- .039*
(.013)
--
LT -- -- -6.16
(4.37)
-- -- 768.3
(656.6)
-- -- 35.6*
(15.5)
-- -- 1.24
(.43)
ST -- -- 9.36*
(4.41)
-- -- 3061*
(662)
-- -- 51.8*
(15.2)
-- -- 1.38**
(.41)
Notes: All labor market characteristics measured over periods not on AFDC.
n = 514.
Standard errors in parentheses.
*: significant at the 10-percent level.
T = total-time-on; N = number of spells; L = average spell length; LT = dummy for long-termer, Definition 2;
ST = dummy for short-termer, Definition 2.
a All coefficients multiplied by 100.

The regressions containing long-termer and short-termer dummies show that short-termers are always significantly better off than either long-termers or cyclers, as expected, but that long-termers and cyclers are not always statistically different and not always in the same direction. Again, long-termers appear to have slightly lower employment rates than cyclers (about 6 percentage points), insignificantly different earnings, but higher weekly and hourly wage rates. In fact, these results directly reflect the means shown in Table 14-4, but the regressions indicate statistical significance levels.

These findings show that the value of an individual's total-time-on, and whether she is or not a short-termer, are the most consistent predictors of labor market potential. The degree of turnover and whether a woman is a cycler or a long-termer are less consistently correlated with labor market performance. Moreover, when they are, they indicate that cyclers are worse off than long-termers in terms of earnings potential, and no better off than long-termers in terms of overall earnings.

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