We employ the model used by Fraker, Moffitt, and Wolf (1985) to estimate effective tax rates and guarantees in the Aid to Families with Dependent Children (AFDC) program for the years 1967- 82 to produce comparable estimates for 1983- 91. We compare this method of benefit prediction with other methods in the literature and clarify the interpretation of estimates generated using the Fraker, Moffitt, and Wolf model. We use our estimates for the period from 1983 to 1991 to examine how effective AFDC tax rates and guarantee levels have changed over time and relative to nominal, or official, program parameters.

Terra McKinnish is a joint doctoral candidate in the Department of Statistics and Heinz School of Public Policy and Management at Carnegie Mellon University. Seth Sanders is an associate professor of economics at the Heinz School of Public Policy at Carnegie Mellon University. Jeffrey Smith is an assistant professor of economics at the University of Western Ontario. They thank Thomas Fraker and Robert Moffitt for making their notes and documentation available for this study and for their helpful correspondence during the early stages of this research. They also thank Linda Mellgren at the U.S. Department of Health and Human Services for her help in obtaining the Quality Control data and Boh Shelbourne for discussions regarding the treatment of non-AFDC income by the AFDC program. The data used in this article can be obtained beginning August 1999 through August 2002 from Seth Sanders, Heinz School of Public Policy, Carnegie Mellon University, Pittsburgh, PA 15213, or sanders@ andrew.cmu.edu.

© 2002 by the Board of Regents of the University of Wisconsin System

US ISSN 0022-166X

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