By Sheldon Danziger
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Additional info for Economic Conditions and Welfare Reform
Figlio and James P. Ziliak 17 Review of Caseload Literature 19 Reconciling the CEA and Ziliak et al. 24 What Will Happen to Recipiency Rates in the Next Recession? 37 Conclusion 44 Notes 45 References 47 What Goes Up Must Come Down? Geoffrey Wallace and Rebecca M. Blank 49 Existing Research on Caseload Change 52 Why Food Stamp Caseloads Are Also Interesting 56 Estimates of the Determinants of Both AFDC/TANF and Food Stamp Caseloads 57 How Well Do These Estimates Explain Both the Rise and Fall of Caseloads?
The AFDC program parameter was the AFDC maximum-benefit guarantee for a family of three, which is used to capture the price of welfare. Lastly, the state fixed effects and trends controlled for permanent differences in laborforce composition and welfare populations, as well as trending differences across states. In their preferred results (Council of Economic Advisers 1997, Table 2, Column 6), the CEA found that contemporary unemployment has little effect on AFDC recipiency, but that a 1-percentage-point increase in lagged unemployment increases recipiency by almost 5 percent.
The advantage of the state panel-data approach is that it fosters identification of the business-cycle and welfare-reform effects by exploiting spatial differences across states and time-series differences within states. Because the focus of this paper is in reconciling the results from this literature, we provide a more detailed summary of the methods. The Council of Economic Advisers (1997) employed annual statelevel panel data for 19761996 to model per capita AFDC recipiency rates. The dependent variable combines AFDC recipients, not cases, in both the Basic and UP programs; this implicitly assumes that the business-cycle and welfare-reform responses between the two groups are identical.