Quasi-Experimental Evidence on the Effects of Expanding Cash Welfare
99 Pages Posted: 18 Feb 2021 Last revised: 19 Jan 2022
Date Written: January 2022
We study the labor supply and consumption responses to cash assistance delivered through the Temporary Assistance to Needy Families (TANF) Program in the United States. Exploiting a sharp increase in cash benefit generosity for low-income single-parent families in New Hampshire due to a legislative revision to payment calculations, we implement difference-in-differences and triple-differences to estimate the impacts of greater benefits on work behavior as well as on food expenditures and food security. Our results suggest that more generous cash assistance reduces labor supply among likely TANF-eligible individuals. At the same time, greater cash benefits increase household food spending and reduce the incidence of food insecurity. Our findings speak to individual and family responses to expanded cash assistance in an era in which cash welfare is at historically low levels, is time limited, and imposes work requirements.
Keywords: welfare, cash assistance, Temporary Assistance to Needy Families, moral hazard, labor supply, redistribution, consumption, food security
JEL Classification: H53, H75, I38, J22
Suggested Citation: Suggested Citation