Regression Analysis of Temporary Assistance for Needy Families/Aid to Families with Dependant Children for By: Ryan Rafacz

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.

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

Research Data The data is time series data from The data collected for this regression came from the Department of Health and Human Services as well as the Bureau of Labor Statistics.

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.

Equation  Y t =B 1 +B 2 X 2 +B 3 X 3 +B 4 X 4 +B 5 t+u t  Y t =TANF Expenditure  X 2 =Total Recipients  X 3 =Unemployment Rate  X 4 =Two Parent Families  t =Time Trend

Regression Output Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations35 ANOVA dfSSMSFSignificance F Regression E-14 Residual Total CoefficientsStandard Errort StatP-valueLower 95% Intercept E Total Recipients E Unemployment Rate Two Parent Families Time Trend E

Result Interpretation R 2 =.888 Significance F=7.224E-14 X 2 – as total recipients rises by 1 TANF rises by about 1 X 3 – as unemployment rises by 1 TANF decreases by about 97 X 4 – 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 R 2 =.888 Significance F=7.224E-14 X 2 – as total recipients rises by 1 TANF rises by about 1 X 3 – as unemployment rises by 1 TANF decreases by about 97 X 4 – 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

Things To Consider 1 st 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.

Durbin-Watson Test (Σ(e t -e t-1 ) 2 ) = Σ(e t 2 ) = (Σ(e t -e t-1 ) 2 )/Σ(e t 2 ) = (Σ(e t -e t-1 ) 2 ) = Σ(e t 2 ) = (Σ(e t -e t-1 ) 2 )/Σ(e t 2 ) = Lower Critial Value Upper Critial Value dLdL dudu

Durbin-Watson Value n=35; k=

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 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