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Markov forecasting methods for welfare caseloads

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  • Grogger, Jeffrey

Abstract

Forecasting welfare caseloads, particularly turning points, has become more important than ever. Since welfare reform, welfare has been funded via a block grant, which means that unforeseen changes in caseloads can have important fiscal implications for states. In this paper I develop forecasts based on the theory of Markov chains. Since today's caseload is a function of the past caseload, the caseload exhibits inertia. The method exploits that inertia, basing forecasts of the future caseload on past functions of entry and exit rates. In an application to California welfare data, the method accurately predicted the late-2003 turning point roughly one year in advance.
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Suggested Citation

  • Grogger, Jeffrey, 2007. "Markov forecasting methods for welfare caseloads," Children and Youth Services Review, Elsevier, vol. 29(7), pages 900-911, July.
  • Handle: RePEc:eee:cysrev:v:29:y:2007:i:7:p:900-911
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    1. Pagan,Adrian & Ullah,Aman, 1999. "Nonparametric Econometrics," Cambridge Books, Cambridge University Press, number 9780521355643, January.
    2. Jacob Alex Klerman & Steven J. Haider, 2004. "A Stock-Flow Analysis of the Welfare Caseload," Journal of Human Resources, University of Wisconsin Press, vol. 39(4).
    3. Jeffrey Grogger & Steven J. Haider & Jacob Klerman, 2003. "Why Did the Welfare Rolls Fall During the 1990's? The Importance of Entry," American Economic Review, American Economic Association, vol. 93(2), pages 288-292, May.
    4. Jeffrey Grogger & Steven J. Haider & Jacob Klerman, 2003. "Why Did the Welfare Rolls Fall During the 1990's? The Importance of Entry," American Economic Review, American Economic Association, vol. 93(2), pages 288-292, May.
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    Cited by:

    1. Hayashi, Masayoshi, 2014. "Forecasting welfare caseloads: The case of the Japanese public assistance program," Socio-Economic Planning Sciences, Elsevier, vol. 48(2), pages 105-114.
    2. Dean Fantazzini, 2014. "Nowcasting and Forecasting the Monthly Food Stamps Data in the US Using Online Search Data," PLOS ONE, Public Library of Science, vol. 9(11), pages 1-27, November.

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    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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