Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/fip/fedgfe/2022-30.html
   My bibliography  Save this paper

Financial Repercussions of SNAP Work Requirements

Author

Listed:
Abstract
This paper considers the credit response of individuals after the implementation of new work requirements for Supplemental Nutrition Assistance (SNAP) benefits using a large nationally representative sample of credit records. It does so by exploiting county-level variation in the implementation of work requirements after the Great Recession in a difference-in-differences design. We find that the implementation of new SNAP work requirements leads more people to seek out new credit and leads to an increase in credit account openings. New work requirements also result in an increase in total outstanding balances on bank and retail card accounts and increase the number of borrowers that are past due on these accounts. These findings suggest that some individuals are turning to credit and debt products to cover expenses after losing eligibility for SNAP benefits.

Suggested Citation

  • Samuel Dodini & Jeff Larrimore & Anna Tranfaglia, 2022. "Financial Repercussions of SNAP Work Requirements," Finance and Economics Discussion Series 2022-030, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2022-30
    DOI: 10.17016/FEDS.2022.030
    as

    Download full text from publisher

    File URL: https://www.federalreserve.gov/econres/feds/files/2022030pap.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.17016/FEDS.2022.030?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. James P. Ziliak & Craig Gundersen & David N. Figlio, 2003. "Food Stamp Caseloads over the Business Cycle," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 903-919, April.
    2. Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2009. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 109-139, October.
    3. Bruce D. Meyer & Dan T. Rosenbaum, 2001. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 1063-1114.
    4. Irina A. Telyukova, 2013. "Household Need for Liquidity and the Credit Card Debt Puzzle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(3), pages 1148-1177.
    5. Pierre-Marc Daigneault & Christian Macé, 2020. "Program Awareness, Administrative Burden, and Non-Take-Up of Québec’s Supplement to the Work Premium," International Journal of Public Administration, Taylor & Francis Journals, vol. 43(6), pages 527-539, April.
    6. Tal Gross & Matthew J. Notowidigdo & Jialan Wang, 2020. "The Marginal Propensity to Consume over the Business Cycle," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(2), pages 351-384, April.
    7. Amy Finkelstein & Matthew J Notowidigdo, 2019. "Take-Up and Targeting: Experimental Evidence from SNAP," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1505-1556.
    8. Dahl, Molly & DeLeire, Thomas & Schwabish, Jonathan, 2009. "Stepping Stone or Dead End? The Effect of the EITC on Earnings Growth," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(2), pages 329-346, June.
    9. Scott L. Fulford & Scott Schuh, 2023. "Revolving versus Convenience Use of Credit Cards: Evidence from U.S. Credit Bureau Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(7), pages 1667-1701, October.
    10. Tatiana Homonoff & Jason Somerville, 2021. "Program Recertification Costs: Evidence from SNAP," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 271-298, November.
    11. Justine Hastings & Jesse M. Shapiro, 2018. "How Are SNAP Benefits Spent? Evidence from a Retail Panel," American Economic Review, American Economic Association, vol. 108(12), pages 3493-3540, December.
    12. Andrew Gelman & Guido Imbens, 2019. "Why High-Order Polynomials Should Not Be Used in Regression Discontinuity Designs," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(3), pages 447-456, July.
    13. Scott L. Fulford & Scott Schuh, 2017. "Credit card utilization and consumption over the life cycle and business cycle," Working Papers 17-14, Federal Reserve Bank of Boston.
    14. Hoynes, Hilary Williamson & Schanzenbach, Diane Whitmore, 2012. "Work incentives and the Food Stamp Program," Journal of Public Economics, Elsevier, vol. 96(1), pages 151-162.
    15. J. Carter Braxton & Gordon Phillips & Kyle Herkenhoff, 2018. "Can the Unemployed Borrow? Implications for Public Insurance," 2018 Meeting Papers 564, Society for Economic Dynamics.
    16. Sebastian Calonico & Matias D. Cattaneo & Rocio Titiunik, 2014. "Robust Nonparametric Confidence Intervals for Regression‐Discontinuity Designs," Econometrica, Econometric Society, vol. 82, pages 2295-2326, November.
    17. James X. Sullivan, 2008. "Borrowing During Unemployment: Unsecured Debt as a Safety Net," Journal of Human Resources, University of Wisconsin Press, vol. 43(2), pages 383-412.
    18. Olga Gorbachev & María José Luengo-Prado, 2019. "The Credit Card Debt Puzzle: The Role of Preferences, Credit Access Risk, and Financial Literacy," The Review of Economics and Statistics, MIT Press, vol. 101(2), pages 294-309, May.
    19. Colin Gray & Adam Leive & Elena Prager & Kelsey Pukelis & Mary Zaki, 2023. "Employed in a SNAP? The Impact of Work Requirements on Program Participation and Labor Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 15(1), pages 306-341, February.
    20. James P. Ziliak & Craig Gundersen & David N. Figlio, 2003. "Food Stamp Caseloads over the Business Cycle," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 903-919, April.
    21. Jason B. Cook & Chloe N. East, 2023. "The Effect of Means-Tested Transfers on Work: Evidence from Quasi-Randomly Assigned SNAP Caseworkers," NBER Working Papers 31307, National Bureau of Economic Research, Inc.
    22. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    23. Jeehoon Han & Bruce D. Meyer & James X. Sullivan, 2022. "Real-Time Poverty, Material Well-Being, and the Child Tax Credit," National Tax Journal, University of Chicago Press, vol. 75(4), pages 817-846.
    24. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 605-637.
    25. Danny Yagan, 2019. "Employment Hysteresis from the Great Recession," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 2505-2558.
    26. Zhanjun Hao & Beibei Li & Xiaochao Dang, 2018. "A Method for Improving UWB Indoor Positioning," Mathematical Problems in Engineering, Hindawi, vol. 2018, pages 1-17, December.
    27. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    28. Congressional Budget Office, 2012. "The Supplemental Nutrition Assistance Program," Reports 43173, Congressional Budget Office.
    29. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    30. Chao Li & SongSong Zhang & Yilai Zhang & Yong Xie, 2018. "An improved strong designated verifier signature scheme," International Journal of Distributed Sensor Networks, , vol. 14(12), pages 15501477188, December.
    31. Joanne W. Hsu & David A. Matsa & Brian T. Melzer, 2018. "Unemployment Insurance as a Housing Market Stabilizer," American Economic Review, American Economic Association, vol. 108(1), pages 49-81, January.
    32. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2019. "The Effect of Minimum Wages on Low-Wage Jobs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1405-1454.
    33. Igor Livshits, 2022. "Meet the New Borrowers," Economic Insights, Federal Reserve Bank of Philadelphia, vol. 7(1), pages 9-16, March.
    34. Jeppe Druedahl & Casper Nordal Jørgensen, 2018. "Precautionary borrowing and the credit card debt puzzle," Quantitative Economics, Econometric Society, vol. 9(2), pages 785-823, July.
    35. Congressional Budget Office, 2012. "The Supplemental Nutrition Assistance Program," Reports 43173, Congressional Budget Office.
    36. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    37. Han, Jeehoon, 2022. "The impact of SNAP work requirements on labor supply," Labour Economics, Elsevier, vol. 74(C).
    38. Matias D. Cattaneo & Nicolas Idrobo & Rocio Titiunik, 2023. "A Practical Introduction to Regression Discontinuity Designs: Extensions," Papers 2301.08958, arXiv.org, revised Mar 2024.
    39. Rachael Beer & Felicia Ionescu & Geng Li, 2018. "Are Income and Credit Scores Highly Correlated?," FEDS Notes 2018-08-13-1, Board of Governors of the Federal Reserve System (U.S.).
    40. Scott Fulford & Joanna Stavins, 2022. "Does getting a mortgage affect consumer credit use?," Review of Economics of the Household, Springer, vol. 20(3), pages 955-991, September.
    41. Samuel Dodini, 2023. "Insurance Subsidies, the Affordable Care Act, and Financial Stability," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(1), pages 97-136, January.
    42. Timothy F. Harris, 2021. "Do Snap Work Requirements Work?," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 72-94, January.
    43. Lucie Schmidt & Lara Shore-Sheppard & Tara Watson, 2016. "The Effect of Safety-Net Programs on Food Insecurity," Journal of Human Resources, University of Wisconsin Press, vol. 51(3), pages 589-614.
    44. Saurabh Bhargava & Dayanand Manoli, 2015. "Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment," American Economic Review, American Economic Association, vol. 105(11), pages 3489-3529, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert W. Hahn & Robert D. Metcalfe, 2021. "Efficiency and Equity Impacts of Energy Subsidies," American Economic Review, American Economic Association, vol. 111(5), pages 1658-1688, May.
    2. Colin Gray & Adam Leive & Elena Prager & Kelsey Pukelis & Mary Zaki, 2023. "Employed in a SNAP? The Impact of Work Requirements on Program Participation and Labor Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 15(1), pages 306-341, February.
    3. Colin Gray & Adam Leive & Elena Prager & Kelsey Pukelis & Mary Zaki, 2023. "Employed in a SNAP? The Impact of Work Requirements on Program Participation and Labor Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 15(1), pages 306-341, February.
    4. Das, Debasmita, 2019. "SNAP Work Requirement and Food Insecurity," MPRA Paper 109964, University Library of Munich, Germany, revised 01 Oct 2021.
    5. Gabrielle Pepin, 2022. "The effects of welfare time limits on access to financial resources: Evidence from the 2010s," Southern Economic Journal, John Wiley & Sons, vol. 88(4), pages 1343-1372, April.
    6. Melanie Guldi & Lucie Schmidt, 2017. "Taxes, Transfers, and Women’s Labor Supply in the United States," Working Papers 2017-01, University of Central Florida, Department of Economics.
    7. Flores-Lagunes, Alfonso & Jales, Hugo B. & Liu, Judith & Wilson, Norbert L., 2023. "Moving Policies Toward Racial and Ethnic Equality: The Case of the Supplemental Nutrition Assistance Program," GLO Discussion Paper Series 1272, Global Labor Organization (GLO).
    8. Matthew Freedman & Yoonjung Kim, 2022. "Quasi‐Experimental Evidence on the Effects of Expanding Cash Welfare," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(3), pages 859-890, June.
    9. repec:ags:aaea22:335746 is not listed on IDEAS
    10. Bas Scheer & Wiljan van den Berge & Maarten Goos & Alan Manning & Anna Salomons, 2022. "Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling," CPB Discussion Paper 435, CPB Netherlands Bureau for Economic Policy Analysis.
    11. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    12. Tatiana Homonoff & Jason Somerville, 2021. "Program Recertification Costs: Evidence from SNAP," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 271-298, November.
    13. Freedman, Matthew & Khanna, Shantanu & Neumark, David, 2023. "Combining rules and discretion in economic development policy: Evidence on the impacts of the California Competes Tax Credit," Journal of Public Economics, Elsevier, vol. 217(C).
    14. Dean Jolliffe & Juan Margitic & Martin Ravallion & Laura Tiehen, 2024. "Food stamps and America's poorest," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1380-1409, August.
    15. David Neumark & Brian Asquith & Brittany Bass, 2020. "Longer‐Run Effects Of Anti‐Poverty Policies On Disadvantaged Neighborhoods," Contemporary Economic Policy, Western Economic Association International, vol. 38(3), pages 409-434, July.
    16. John Guyton & Kara Leibel & Day Manoli & Ankur Patel & Mark Payne & Brenda Schafer, 2023. "The Effects of EITC Correspondence Audits on Low-Income Earners," NBER Chapters, in: Tax Policy and the Economy, Volume 38, pages 163-207, National Bureau of Economic Research, Inc.
    17. Chen, Jidong & Shi, Xinzheng & Zhang, Ming-ang & Zhang, Sihan, 2024. "Centralization of environmental administration and air pollution: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    18. Liao, Yanjun (Penny) & Mulder, Philip, 2021. "What's at Stake? Understanding the Role of Home Equity in Flood Insurance Demand," RFF Working Paper Series 21-25, Resources for the Future.
    19. Erdal Asker & Eric J. Brunner & Stephen L. Ross, 2022. "The Impact of School Spending on Civic Engagement: Evidence from School Finance Reforms," Working papers 2022-16, University of Connecticut, Department of Economics.
    20. Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Chun Zhu, Susan, 2022. "How International Experience Helps Shape Labor Market Outcomes," Working Paper Series 1453, Research Institute of Industrial Economics, revised 09 Jun 2024.
    21. Bergholt, Drago & Røisland, Øistein & Sveen, Tommy & Torvik, Ragnar, 2023. "Monetary policy when export revenues drop," Journal of International Money and Finance, Elsevier, vol. 137(C).

    More about this item

    Keywords

    Credit cards; SNAP Benefits; Work Requirements;
    All these keywords.

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgfe:2022-30. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ryan Wolfslayer ; Keisha Fournillier (email available below). General contact details of provider: https://edirc.repec.org/data/frbgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.