Panel Paper: The Effect of the US Safety Net on Material Hardship over the Past Quarter Century

Saturday, November 10, 2018
McKinley - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Signe-Mary McKernan1, Caroline Ratcliffe1 and John Iceland2, (1)Urban Institute, (2)Pennsylvania State University

Background: The United States’ policy efforts to improve family well-being through safety net programs are small relative to those of other developed countries, as measured in comparison to the size of the overall economy. Current efforts to control the federal budget and shift government priorities could make these programs even smaller. What is at risk? This study evaluates the effect of key income-tested programs in the United States on material hardship.

Our primary research question is: How does income-tested program participation in Temporary Assistance to Need Families (TANF), Supplementary Nutrition Assistance Program (SNAP), or public health insurance (e.g., Medicaid, State Children's Health Insurance Program, SCHIP)—affect the material hardship of low-income families with children?

Data and Method: We answer this question using monthly data from the Survey of Income and Program Participation (SIPP) from 1992 through 2011, the most recent year all three material hardship measures are available in the SIPP. We supplement the SIPP data with state-level economic and policy data from multiple sources, such as the Urban Institute’s Welfare Rules database and the USDA’s SNAP Rules Database.

We use an instrumental variables (IV) approach that uses the variation in state rules to identify the effect of program participation on material hardship. We measure participation using a treatment-on-the treated estimate with endogenous participation instrumented with policy parameters.

Preliminary Findings: We find that participation in TANF, SNAP, or public health insurance reduces the total number of hardships low-income families with children experience 48 percent and their food insufficiency 72 percent. We find a 40 percent reduction in unmet medical or dental need but this finding is not measured precisely enough to be statistically significant after we conservatively adjust our standard errors for clustering by state. Our participation measure captures participation in any of the three programs because most families are using multiple programs and the programs likely have an interactive effect making them difficult to disentangle.

Significance: Our analysis contributes to the US safety net literature by looking at the simultaneous effect of several programs and accounting for behavioral responses. Furthermore, we focus on the effect of these programs on non-monetary material hardship measures including food insufficiency, unmet medical or dental needs, and an aggregated measure of hardship that includes, for example, inability to meet basic expenses. This is the first study we are aware of to measure the effect of multiple program receipt on unmet medical or dental need and the total number of hardships experienced—including inability to pay utility bills, rent or mortgage, phone or utility service cut, evicted, or unmet medical or dental need.