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Analysis of TANF Expenditure Trends: Insights from 1970-2004 Regression Study

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This study examines the impact of key demographic factors on Temporary Assistance for Needy Families (TANF) expenditures from 1970 to 2004. The hypothesis posits that increasing unemployment and the number of recipients raise welfare costs, while growth in two-parent families reduces expenditures. Regression analysis conducted using data from the Department of Health and Human Services and Bureau of Labor Statistics reveals a strong relationship between these variables, as evidenced by an R² value of 0.888. The findings indicate significant effects of recipient numbers and family structure on welfare spending trends over time.

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Analysis of TANF Expenditure Trends: Insights from 1970-2004 Regression Study

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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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