Panel Paper:
The US Safety Net's Role in Improving Material Hardship over the Past Quarter Century
*Names in bold indicate Presenter
A number of previous studies have examined the effect of various transfer programs on poverty. Some of these have taken a simple approach, such as calculating families’ incomes and poverty status with and without a particular government benefit. While these studies are useful, they do not take into account possible behavioral responses to program benefits, such as reduced work effort or various family formation decisions. Other studies have examined the effect of specific programs on poverty while taking into account these behavioral responses, and these likewise have been informative. Our analysis builds on these studies by looking at the simultaneous effect of several programs. Furthermore, we focus on the effect of these programs on material hardships, including food insufficiency and unmet medical need. There has been increasing interest in looking not only at family income and poverty, but on these kinds of hardships as well, as they directly measure the ability of families to meet their basic needs.
We use data collected from several sources, the main one consisting of seven panels of the Survey of Income and Program Participation (SIPP) that provide monthly information from 1992 through 2011. We supplement the SIPP data with state-level economic and policy data from the Urban Institute’s Welfare Rules Database and USDA’s SNAP Policy Database, among other sources. Using an instrumental variables approach, we evaluate the effects of participation in AFDC/TANF, Food Stamps/SNAP, and Medicaid/SCHIP on low-income families’ material hardship, while controlling for federal and state minimum wage and EITC policies, demographic characteristics, and year and state fixed effects.
We find that (1) participation in any of the three programs reduces food insufficiency, unmet medical needs, and the total number of hardships families experience. (2) Isolating each individual program’s effect, an increase in SNAP benefits reduces all three measures of hardship, an increase in TANF benefits reduces unmet medical need, and participating in Medicaid/SCHIP reduces the total number of hardships a low-income family with children experiences.
As an expert on US safety net policies, I’m excited to engage with experts from other countries. What lessons can US policy learn from other countries and vice versa? What role does the safety net play in social protection? Current US social protections are not enough to prevent and protect families from inequality and income volatility. In many ways, the antiquated US safety net has been successful at reducing poverty and expanding health care, but it was not designed for the ups and downs of today's life -- the shocks that can act like dominoes in taking families down. Updating safety nets to work with the realities of today’s labor market is key, as is increased attention to specific vulnerable groups, such as people with disabilities.
