What explains recent changes in SNAP enrollment?
In The Decline, rebound; and Further rise in SNAP Enrollment: Disentangling Business cycle Fluctuations and Policy changes (NBER Working Paper No. 19363), Peter Ganong and Jeffrey Liebman conclude that recent SNAP enrollment increases were driven by the substantial increase in the number of people living close to the poverty line. Between 2007 and 2011, an additional 19.1 mil lion people enrolled. Of those, an estimated 3.4 million (18 per cent) became eligible as a result of more relaxed asset and time limits. The authors estimate that changes in local unemployment explain at least two-thirds of the increase in SNAP enrollment during this period.
The authors estimate that a persistent one percentage point increase in the local unemployment rate is associated with an increase in SNAP enrollment of 20 percent over three years. They note that unemployment is not the only source of economic distress that might lead an individual to become a SNAP beneficiary. Even those who remain employed may experience economic distress if their work hours are cut or widespread unemployment diminishes their informal economic support network. Using data from the Survey of Income and Program Participation (SIPP), the authors calculate that 31 percent of the aggregate increase in SNAP receipt occurred in families where "no member experienced an unemployment spell and at least one member was in the labor force."
The authors note that SNAP rolls have not risen continuously in the last two decades. SNAP enrollment began declining in 1993, reaching its lowest point relative to the U.S. population in 2001. It fell at an increasing rate after the passage of national welfare reform legislation in 1996, declining "more in the demographic groups most affected by welfare reform, in states where cash assistance caseloads dropped the most, and for people receiving cash assistance at the time of the 1996 welfare reform legislation." Enrollment by families headed by a single mother fell by about 4.4 million during this period. Combining data from the SIPP and the random audits of about 50,000 cases done each year as part of the federal government's quality control system, the authors estimate that about half of that enrollment decline came about because mothers increased their employment and earnings enough to exceed income eligibility limits. The other half of the decline in receipt is attributable to mothers who left cash assistance but had incomes that were low enough to maintain eligibility.
Between 2001 and 2007, the SNAP take-up rate rose from 54 percent to 69 percent. The authors conclude that one-fourth to one-third of the increased take-up was the result of simplified enrollment and more relaxed asset tests that were implemented during this period in an attempt to increase program participation among the working poor. Because their estimates suggest that states with larger declines in cash assistance receipt in the 1990s had larger increases in SNAP receipt in the following decade, they hypothesize that the rise in SNAP receipt may also reflect a "bounce back" from welfare reform.
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|Publication:||The NBER Digest|
|Date:||Dec 1, 2013|
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