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By: Ryan Rafacz

Regression Analysis of Temporary Assistance for Needy Families/Aid to Families with Dependant Children for 1970-2004. By: Ryan Rafacz. Background On Welfare. Early welfare programs began in 1601 with the English Poor Law

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By: Ryan Rafacz

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  1. Regression Analysis of Temporary Assistance for Needy Families/Aid to Families with Dependant Children for 1970-2004 By: Ryan Rafacz

  2. Background On Welfare Early welfare programs began in 1601 with the English Poor Law Introduction of a welfare program in the United States after the Great Depression as part of Roosevelt’s “New Deal” President Clinton signed welfare reform into law in 1996.

  3. Hypothesis A rise in unemployment and total number of recipients will cause upward pressure on welfare costs, while a rise in two-parent families will cause TANF expenditure to fall. See how this relates to time

  4. Research Data The data is time series data from 1970-2004 The data collected for this regression came from the Department of Health and Human Services as well as the Bureau of Labor Statistics. http://aspe.hhs.gov/hsp/indicators06/apa.pdf http://www.bls.gov/cps/prev_yrs.htm

  5. Theory • To test this hypothesis I collected data from my sources placed it in a table and ran a regression using excel hoping to get results supporting my hypothesis.

  6. Equation Yt=B1+B2X2+B3X3+B4X4+B5t+ut Yt=TANF Expenditure X2=Total Recipients X3=Unemployment Rate X4=Two Parent Families t =Time Trend

  7. Regression Output

  8. Result Interpretation R2=.888 Significance F=7.224E-14 X2 – as total recipients rises by 1 TANF rises by about 1 X3 – as unemployment rises by 1 TANF decreases by about 97 X4 – as the number of two parent families receiving TANF rises by 1 TANF expenditure rises by about 21.5 t – shows over time with each year that passes TANF expenditure decreases by about 370

  9. Things To Consider • 1st order autocorrelation • Due to using a time trend autocorrelation must be examined. • Using both a graph of the residuals as well as using the Durbin-Watson test.

  10. Durbin-Watson Test • (Σ(et-et-1)2) = 210370576.8 • Σ(et2) = 141979723.4 • (Σ(et-et-1)2)/Σ(et2) = 1.481694511

  11. Durbin-Watson Valuen=35; k=4 1.222

  12. Conclusion • Findings • There is a significant effect on welfare expenditure with a rising number of recipients and two-parent families, but over time we have a decreasing expenditure. • Further Reseach • Look at labor-force participation • Look at income of low-skilled workers • Effects of Welfare reform

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