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

6. 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.

7. 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

8. Regression Output Regression Statistics Multiple R0.942662216 R Square0.888612053 Adjusted R Square0.873760327 Standard Error2175.467179 Observations35 ANOVA dfSSMSFSignificance F Regression41132661987283165496.659.832240117.22428E-14 Residual30141979723.44732657.445 Total341274641710 CoefficientsStandard Errort StatP-valueLower 95% Intercept15716.766782584.4377846.0813097851.11106E-0610438.6407 Total Recipients1.0724137320.1924479975.5724858184.62942E-060.679382491 Unemployment Rate-97.14875536327.7421632-0.2964182410.768953135-766.4875458 Two Parent Families21.454424117.1432944953.0034354780.0053435766.865870569 Time Trend-370.431399747.63185022-7.776968521.11987E-08-467.7086151

9. 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

10. 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.

12. Durbin-Watson Test (Σ(e t -e t-1 ) 2 ) = 210370576.8 Σ(e t 2 ) = 141979723.4 (Σ(e t -e t-1 ) 2 )/Σ(e t 2 ) = 1.481694511 (Σ(e t -e t-1 ) 2 ) = 210370576.8 Σ(e t 2 ) = 141979723.4 (Σ(e t -e t-1 ) 2 )/Σ(e t 2 ) = 1.481694511 Lower Critial Value Upper Critial Value dLdL dudu 1.2221.726

13. Durbin-Watson Value n=35; k=4 1.222

14. 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