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The More Things Change, the More They Stay the Same? The Safety Net and Poverty in the Great Recession

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  • Marianne Bitler
  • Hilary Hoynes

Abstract

Much attention has been given to the large increase in safety net spending, particularly in Unemployment Insurance and Food Stamp spending, during the Great Recession. In this paper we examine the relationship between poverty, the social safety net, and business cycles historically and test whether there has been a significant change in this relationship during the Great Recession. We do so using an alternative measure of poverty that incorporates taxes and in-kind transfers. We explore the mediating role played by four core safety net programs--Food Stamps, cash welfare (AFDC/TANF), the Earned Income Tax Credit, and Unemployment Insurance--in buffering families from negative economic shocks. This analysis yields several important findings. Our most robust and important finding is the safety net is doing less to provide protection for the most disadvantaged. In the post-welfare reform world, TANF did not respond in the Great Recession and extreme poverty is more cyclical than in prior recessions. On the other hand, Food Stamps and UI are providing more protection-or at least providing no less protection-in the Great Recession, although these results are less robust across our different models. These programs are more likely to affect households somewhat higher up the income distribution; we find some evidence of a reduction in cyclicality at 100% poverty and little evidence about this at higher income-to-poverty levels.

Suggested Citation

  • Marianne Bitler & Hilary Hoynes, 2013. "The More Things Change, the More They Stay the Same? The Safety Net and Poverty in the Great Recession," NBER Working Papers 19449, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19449
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bruce D. Meyer & Nikolas Mittag, 2015. "Using Linked Survey and Administrative Data to Better Measure Income: Implications for Poverty, Program Effectiveness and Holes in the Safety Net," Upjohn Working Papers and Journal Articles 15-242, W.E. Upjohn Institute for Employment Research.
    2. East, Chloe N. & Kuka, Elira, 2015. "Reexamining the consumption smoothing benefits of Unemployment Insurance," Journal of Public Economics, Elsevier, vol. 132(C), pages 32-50.
    3. Peter Ganong & Jeffrey B. Liebman, 2013. "The Decline, Rebound, and Further Rise in SNAP Enrollment: Disentangling Business Cycle Fluctuations and Policy Changes," NBER Working Papers 19363, National Bureau of Economic Research, Inc.
    4. Marianne Bitler & Hilary Hoynes & Elira Kuka, 2017. "Child Poverty, the Great Recession, and the Social Safety Net in the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(2), pages 358-389, March.
    5. Mahé, Clotilde, 2017. "Does publicly provided health care affect migration? Evidence from Mexico," MERIT Working Papers 049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. James P. Ziliak, 2015. "Temporary Assistance for Needy Families," NBER Chapters,in: Economics of Means-Tested Transfer Programs in the United States, Volume 1, pages 303-393 National Bureau of Economic Research, Inc.
    7. Bruce Western & Deirdre Bloome & Benjamin Sosnaud & Laura M. Tach, 2016. "Trends in Income Insecurity Among U.S. Children, 1984–2010," Demography, Springer;Population Association of America (PAA), vol. 53(2), pages 419-447, April.
    8. repec:spr:demogr:v:55:y:2018:i:1:d:10.1007_s13524-017-0642-7 is not listed on IDEAS
    9. William H. Rogers & Anne E. Winkler, 2014. "How Did the Housing and Labor Market Crises Affect Young Adults' Living Arrangements?," Working Papers 1005, University of Missouri-St. Louis, Department of Economics.
    10. repec:bla:coecpo:v:35:y:2017:i:2:p:312-330 is not listed on IDEAS
    11. 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.
    12. Hilary Hoynes & Mark Stabile, 2017. "How do the U.S and Canadian Social Safety Nets Compare for Women and Children?," NBER Working Papers 23380, National Bureau of Economic Research, Inc.
    13. Elisabetta De Cao, 2017. "The Impact of Unemployment on Child Maltreatment in the United States," Economics Series Working Papers 837, University of Oxford, Department of Economics.
    14. repec:iza:izawol:journl:2017:n:355 is not listed on IDEAS
    15. Vanda Almeida, 2016. "Income inequality and redistribution in the aftermath of the 2007-2007 crisis: the US case," Working Papers 096, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    16. Lucie Schmidt, 2013. "The New Safety Net? Supplemental Security Income after Welfare Reform," Department of Economics Working Papers 2013-07, Department of Economics, Williams College.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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