Association for Public Policy Analysis & Management

We investigate the prevalence of potential work disincentives among recipients of government benefits. We identify “high” marginal tax rates—occurring when a family’s new earnings are offset by more than 50% due to a loss of social welfare benefits. We examine the prevalence of such families in the U.S. using data from the Current Population Survey and TRIM3. We estimate what types of program benefits and which combination of program benefits are typical for needy families. We present results to address the following research questions: Which programs have cliff effects among TANF, housing assistance, SNAP, and child care subsidies? What is the incidence of social welfare benefit cliffs by state or region? What is the size of the population near the income cliff by family type?