Wisconsin - Madison Institute for Research on Poverty

Abstract

Notes References Page i iv 1 5 5 21 27 33 42 42 51 56 58 61 Executive Summary The sudden and dramatic increase in the growth rate of the caseload in the Aid to Families with Dependent Children (AFDC) program in the late 1960s and early 1970s remains the most important historical change in the ca~eload of our most well-known cash transfer program. The caseload in the program grew from about 1.3 million to about 2.5 million in the three years between 1967 and 1970, and increased steadily thereafter into the mid-1970s. At that point the caseload growth rate slowed and, in more recent times, has leveled off. Much of this growth resulted simply from an increase in the number of female heads of household in the United States, but this was not the only cause. Among female heads, participation rates in AFDC rose dramatically from 1967 to 1973, then grew more slowly, and have been falling since around 1979. The question considered in this report is whether this pattern of increase and decline, particularly the period of increase, can be attributed to measurable forces: changes in the benefit levels and work incentives in the AFDC program; changes in the education, age, and other characteristics of female heads; changes in the labor market (e.g., the unemployment rate or potential earnings); changes in the level of other income available to female heads; and so on. The primary question is whether these variables can explain much of the time-series trend in AFDC participation rates. Other questions then follow. If so, which ones are more important? If not, does this constitute evidence that the "structure" of the AFDC participation decision has changed? The issue here is an old one: how much of the time-series change in AFDC participation rates has been a result of changes in economic and demographic i forces, and how much has been a result of the whole set of noneconomic forces so frequently discussed-changes in attitudes, reductions in stigma, and changes in eligibility requirements for AFDC (such as elimination of residency and man-in-the-house rules)? Such changes are almost impossible to quantify, so the approach taken here is only indirect: the shift in participation rates over time is decomposed into that portion due to the measurable economic forces and that portion due to all else, and the latter category is interpreted as an approximation of the magnitude of the …

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Cite this paper

@inproceedings{Moffitt1986WisconsinM, title={Wisconsin - Madison Institute for Research on Poverty}, author={Robert A. Moffitt and Vi Summary and Conclusions}, year={1986} }