Safety Net Use

  • Karen Jusko
  • Mark Duggan
  • Hilary Hoynes

Leaders: Mark Duggan, Hilary Hoynes, Karen Jusko

The Safety Net RG is devoted to monitoring changes in government transfers and anti-poverty programs and assessing whether they are meeting the needs of the poor. The U.S. safety net is undergoing such changes as (a) an ongoing decline in TANF cash benefits, (b) rapid increases in spending on EITC, Medicaid, Disability Insurance, Unemployment Insurance, and SNAP, and (c) a dramatic shift toward spending that favors the “working poor” over the more destitute. The CPI affiliates working within this research group are monitoring these changes, examining their implications for poverty, assessing the effectiveness of key government and nongovernment programs in reducing poverty, and modeling the costs and benefits of possible changes in policy and programs. We’ve provided a sampling here of some of this ongoing research.

Poverty Relief Project: With Kate Weisshaar, Karen Jusko uses the poverty relief ratio to evaluate the effectiveness of anti-poverty programs over time, across states, and across countries. Which state is the least effective in fighting poverty? Has the U.S. become more or less effective over time? These and other questions are answered in our latest State of the Union reports.

Long-run effects of SNAP: Have we underestimated the returns to SNAP by ignoring the long-run effects on children exposed to it in their early childhood? It’s now possible to find out.

California Welfare LaboratoryThe poverty rate in California, when measured with the Supplemental Poverty Measure, is the highest in the country. What can be done to bring that rate down? The mission of the California Welfare Laboratory is to make research on California’s welfare programs accessible to all and thus facilitate an informed discussion of what is working and what needs to be improved.

Differential EITC effects: It is often argued that early interventions have especially high payoffs.  Are the returns to the EITC indeed larger when it goes to parents with young children?

Disability and poverty: Does the federal government’s disability program reduce labor supply? Although it’s long been difficult to identify a causal effect, Mark Duggan has now found a way.

The effects of TANF: The TANF program is very decentralized and thus takes on dramatically different forms. How can we exploit that variability to find out what’s working?

Safety Net - CPI Research

Title Author Media
Marriage, Labor Supply and the Dynamics of the Social Safety Net Hamish Low, Costas Meghir, Luigi Pistaferri, Alessandra Voena

Marriage, Labor Supply and the Dynamics of the Social Safety Net

Author: Hamish Low, Costas Meghir, Luigi Pistaferri, Alessandra Voena
Publisher: NBER
Date: 02/2018

The 1996 PRWORA reform introduced time limits on the receipt of welfare in the United States. We use variation by state and across demographic groups to provide reduced form evidence showing that such limits led to a fall in welfare claims (partly due to “banking” benefits for future use), a rise in employment, and a decline in divorce rates. We then specify and estimate a life-cycle model of marriage, labor supply and divorce under limited commitment to better understand the mechanisms behind these behavioral responses, carry out counterfactual analysis with longer run impacts and evaluate the welfare effects of the program. Based on the model, which reproduces the reduced form estimates, we show that among low educated women, instead of relying on TANF, single mothers work more, more mothers remain married, some move to relying only on food stamps and, in ex-ante welfare terms, women are worse off.

Trends in the Distribution of Social Safety Net Support After the Great Recession Robert A. Moffitt, Gwyn Pauley

Trends in the Distribution of Social Safety Net Support After the Great Recession

Author: Robert A. Moffitt, Gwyn Pauley
Publisher: Stanford Center on Poverty and Inequality
Date: 02/2018

The social safety net is widely recognized as having been quite successful in providing major financial support to low-income families during the Great Recession, one of the most severe economic downturns in modern U.S. history. Safety net expenditures grew in aggregate and were widely distributed to all types of needy families. Before the recession, however, while aggregate transfers to the low-income population also exhibited steady growth, the growth was not equally shared across different types of families. Transfers grew much more for the elderly and disabled relative to the nonelderly and nondisabled, for married-parent families relative to single-parent families, and for families with incomes around the poverty line relative to those with the lowest incomes. This brief discusses whether these pre-recession trends have resumed their course now that the recession is over and most of the additional spending adopted during the recession has been phased out. We find that the favorable effects on aggregate spending on low-income families during the recession have been sustained, with few declines and mostly resumed expenditure growth rather than a return to pre-recession levels. Also, the pre-recession disproportionate growth in support for the elderly, the disabled, and married families has not resumed. However, the gap between support for the poorest families and those with higher incomes has resumed and is growing.

Welfare Reform and the Families It Left Behind H. Luke Shaefer, Kathryn Edin

Welfare Reform and the Families It Left Behind

Author: H. Luke Shaefer, Kathryn Edin
Publisher: Stanford Center on Poverty and Inequality
Date: 01/2018

As early as the year 2000, randomized experiments with programs that were designed to closely resemble welfare reform showed that although the programs reduced poverty overall, they also increased deep poverty. Since that time, research utilizing numerous nationally representative household surveys and other data—using a variety of methods—has documented the stratification of the poor and the rise of disconnected families and $2-a-day poverty. Are these results driven by underreporting in survey data? No. When we control for underreporting, we find that the downward spiral since 1995 is even more dramatic than previously reported. The same is true of findings from SNAP administrative data. Findings from these more robust sources suggest that rather than roughly doubling since welfare reform, $2-a-day poverty tripled or quadrupled. For children in single-mother families, the change is especially dramatic.

Did Welfare Reform Increase Employment and Reduce Poverty? Robert A. Moffitt , Stephanie Garlow

Did Welfare Reform Increase Employment and Reduce Poverty?

Author: Robert A. Moffitt , Stephanie Garlow
Publisher: Stanford Center on Poverty and Inequality
Date: 01/2018

For 60 years, AFDC endured as the country’s best-known cash assistance program for the poor, until Congress replaced it in 1997 with the Temporary Assistance for Needy Families (TANF) program. In a dramatic departure, the new welfare law introduced time limits and work requirements with the goals of encouraging work and discouraging “dependency.” Were those goals realized? There is of course a swirl of opinions on this question. In this article, we review the high-quality research on the law’s effects on work and poverty, with the simple objective of examining whether welfare reform succeeded in reducing dependence on welfare and increasing self-sufficiency.

Scraping by: Income and Program Participation After the Loss of Extended Unemployment Benefits Jesse Rothstein, Robert G. Valletta

Scraping by: Income and Program Participation After the Loss of Extended Unemployment Benefits

Author: Jesse Rothstein, Robert G. Valletta
Publisher: Journal of Policy Analysis and Management
Date: 08/2017

Many Unemployment Insurance (UI) recipients do not find new jobs before exhausting their benefits, even when benefits are extended during recessions. Using Survey of Income and Program Participation (SIPP) panel data covering the 2001 and 2007 to 2009 recessions and their aftermaths, we identify individuals whose jobless spells outlasted their UI benefits (exhaustees) and examine household income, program participation, and health-related outcomes during the six months following UI exhaustion. For the average exhaustee, the loss of UI benefits is only slightly offset by increased participation in other safety net programs (e.g., food stamps), and family poverty rates rise substantially. Self-reported disability also rises following UI exhaustion. These patterns do not vary dramatically across household demographic groups, broad income level prior to job loss, or the two business cycles. The results highlight the unique, important role of UI in the U.S. social safety net.

safety net - CPI Affiliates

Laura Wheaton's picture Laura Wheaton Senior Fellow
Urban Institute
Margarita Estevez-Abe's picture Margarita Estevez-Abe Associate Professor of Political Science, Maxwell School
Syracuse University
Markus Gangl's picture Markus Gangl Professor of Sociology
Goethe-University Frankfurt am Main
Marta Tienda's picture Marta Tienda Professor, Maurice P. During '22 Professor in Demographic Studies; Professor of Sociology and Public Affairs; Director, Program in Latino Studies
Princeton University
Patrick Heuveline's picture Patrick Heuveline Professor, Sociology
University of California, Los Angeles

Pages

Safety Net - Other Research

Title Author Media
The Long-Run Effects of the Earned Income Tax Credit on Women’s Earnings David Neumark, Peter Shirley

The Long-Run Effects of the Earned Income Tax Credit on Women’s Earnings

Author: David Neumark, Peter Shirley
Publisher: NBER
Date: 12/2017

We use longitudinal data on marriage and children from the Panel Study of Income Dynamics to characterize women’s exposure to the federal and state Earned Income Tax Credit (EITC) during their first two decades of adulthood. We then use measures of this exposure to estimate the long-run effects of the EITC on women’s earnings as mature adults. We find some evidence indicating that exposure to a more generous EITC when women were unmarried and had young (pre-school) children leads to higher earnings and hours, and perhaps wages, in the longer run. We also find some evidence that exposure to a more generous EITC when women had young children but were married leads to lower earnings and hours in the longer run. These longer-run effects are to some extent consistent with what we would expect if the short-run effects of the EITC on employment that are documented in other work, and predicted by theory, are reflected in effects of the EITC on cumulative labor market experience (and other consequences of labor market attachment) that influence earnings.

 

Exploding Asthma and ADHD Caseloads: The Role of Medicaid Managed Care Anna Chorniy, Janet Currie, Lyudmyla Sonchak

Exploding Asthma and ADHD Caseloads: The Role of Medicaid Managed Care

Author: Anna Chorniy, Janet Currie, Lyudmyla Sonchak
Publisher: NBER
Date: 10/2017

In the U.S., nearly 11% of school-age children have been diagnosed with ADHD, and approximately 10% of children suffer from asthma. In the last decade, the number of children diagnosed with these conditions has inexplicably been on the rise. This paper proposes a novel explanation of this trend. First, the increase is concentrated in the Medicaid caseload nationwide. Second, nearly 80% of states transitioned their Medicaid programs from fee-for-service (FFS) reimbursement to managed care (MMC) by 2016. Using Medicaid claims from South Carolina, we show that this change contributed to the increase in asthma and ADHD caseloads. Empirically, we rely on exogenous variation in MMC enrollment due a change in the “default” Medicaid plan from FFS or MMC, and an increase in the availability of MMC. We find that the transition from FFS to MMC explains most of the rise in the number of Medicaid children being treated for ADHD and asthma. These results can be explained by the incentives created by the risk adjustment and quality control systems in MMC.

The Non-Market Benefits of Education and Ability James J. Heckman, John Eric Humphries, Gregory Veramendi

The Non-Market Benefits of Education and Ability

Author: James J. Heckman, John Eric Humphries, Gregory Veramendi
Publisher: NBER
Date: 10/2017

This paper analyzes the non-market benefits of education and ability. Using a dynamic model of educational choice we estimate returns to education that account for selection bias and sorting on gains. We investigate a range of non-market outcomes including incarceration, mental health, voter participation, trust, and participation in welfare. We find distinct patterns of returns that depend on the levels of schooling and ability. Unlike the monetary benefits of education, the benefits to education for many non-market outcomes are greater for low-ability persons. College graduation decreases welfare use, lowers depression, and raises self-esteem more for less-able individuals.

Multi-Generational Impacts of Childhood Access to the Safety Net: Early Life Exposure to Medicaid and the Next Generation's Health Chloe N. East, Sarah Miller, Marianne Page, Laura R. Wherry

Multi-Generational Impacts of Childhood Access to the Safety Net: Early Life Exposure to Medicaid and the Next Generation's Health

Author: Chloe N. East, Sarah Miller, Marianne Page, Laura R. Wherry
Publisher: NBER
Date: 09/2017

We examine multi-generational impacts of positive in utero and early life health interventions. We focus on the 1980s Medicaid expansions, which targeted low-income pregnant women, and were adopted differently across states and over time. We use Vital Statistics Natality files to create unique data linking individuals’ in utero Medicaid exposure to the next generation’s health outcomes at birth. We find strong evidence that the health benefits associated with treated generations’ in utero access to Medicaid extend to later offspring in the form of higher average birth weight and decreased incidence of very low birth weight. Later childhood exposure to Medicaid does not lead to persistent health effects across generations. The return on investment is substantially larger than suggested by evaluations of the program that focus only on treated cohorts.

Subsidizing Health Insurance for Low-Income Adults: Evidence from Massachusetts Amy Finkelstein, Nathaniel Hendren, Mark Shepard

Subsidizing Health Insurance for Low-Income Adults: Evidence from Massachusetts

Author: Amy Finkelstein, Nathaniel Hendren, Mark Shepard
Publisher: NBER
Date: 08/2017

How much are low-income individuals willing to pay for health insurance, and what are the implications for insurance markets? Using administrative data from Massachusetts’ subsidized insurance exchange, we exploit discontinuities in the subsidy schedule to estimate willingness to pay and costs of insurance among low-income adults. As subsidies decline, insurance take-up falls rapidly, dropping about 25% for each $40 increase in monthly enrollee premiums. Marginal enrollees tend to be lower-cost, consistent with adverse selection into insurance. But across the entire distribution we can observe – approximately the bottom 70% of the willingness to pay distribution – enrollee willingness to pay is always less than half of own expected costs. As a result, we estimate that take-up will be highly incomplete even with generous subsidies: if enrollee premiums were 25% of insurers’ average costs, at most half of potential enrollees would buy insurance; even premiums subsidized to 10% of average costs would still leave at least 20% uninsured. We suggest an important role for uncompensated care for the uninsured in explaining these findings and explore normative implications.