Panel Paper: The Countercyclical Responsiveness of SNAP, NLSP and WIC

Friday, November 8, 2013 : 10:05 AM
Boardroom (Ritz Carlton)

*Names in bold indicate Presenter

Caroline Danielson, Public Policy Institute of California and Jacob Klerman, Abt Associates, Inc.
The Supplemental Nutrition Assistance Program (SNAP) caseload increased throughout the 2000s; the growth accelerated over the past several years, and it is now the largest U.S. income support program. The coincidence of the recent acceleration with the Great Recession has focused attention on the strength of the countercyclical relationship between SNAP and the economy. Previous research has focused on explaining state-level SNAP caseload trends using state-level proxies for the economy and other determinants. This approach has limitations: economic conditions vary widely within states and demographic groups. It also seems plausible that other nutrition assistance programs—in particular, the two next largest programs, the National School Lunch Program (NSLP) and the Supplemental Nutrition Program for Women, Infants and Children (WIC) —are countercyclical, but very little research has addressed this question.

This paper focuses on the countercyclical relationship between the economy and the three major U.S. nutrition assistance program caseloads at the county level. Our research represents three advances:

  1. Geographically disaggregated analysis:  Previous research conducted at the state level can account only about half of the substantial caseload changes that have occurred over the past two decades. Analysis at the sub-state (primarily county) level is a promising approach for closing this gap in our ability to account for caseload trends. Since labor market conditions vary widely within a state, a state-level approach plausibly introduces “errors in variables” problems, leading to underestimates of the true impact of the local economy on local caseloads. At the same time, labor market measures may have more measurement error at the sub-state level.
  2. Assessment of the robustness of difference-in-difference methods: Analysis at the sub-state level also enables us to include a full set of state-by-year controls, which allows for an examination of the robustness of difference-in-differences models (that include state and year, but not state by year, controls).
  3. More recent data:  From the perspective of the labor market, the nation was mired until very recently in the most severe economic downturn since the Great Depression of the 1930s. Such extreme events are often valuable for understanding causal relationships. In addition, caseload responses to the Great Recession are themselves of considerable interest, and the impact of labor market changes typically continue to be felt even several years later.

We make use of program caseloads administratively reported at the sub-state level, detailed proxies for the economy from the Bureau of Labor Statistics’ Local Area Unemployment Series and the Census Bureau’s Quarterly Workforce Indicators, and proxies for major, state-level nutrition policy changes that have occurred since 2000.

Estimation results to date provide surprising evidence that more robust methods and local area measurement lead to smaller estimates of the effects of the economy on caseloads, implying a potentially larger role for policy and suggesting that these programs will continue their prominent role in the U.S. social safety net even as the economy improves.