Government Shutdown and SNAP Disbursements: Effects on Household Expenditures

Arbeitspapier

We test the ability of SNAP eligible households to smooth consumption when facing unexpected transitory income shocks stemming from the 2018-19 government shutdown. In response to the shutdown, all states were federally mandated to pay February SNAP benefits on or before January 20th. This created a short-term windfall (two payments very close to each other) followed by a longer than normal gap during which no SNAP disbursements were received. We show that expenditures are lower in the month where benefits where advanced vis-à-vis months with unaltered benefits schedules. We complement this finding by exploiting preexisting state-level differences in disbursement schedules that drove some states to temporarily alter the timing of the 2019 March and April SNAP disbursements. These diff-in-diff results show that households in treated states reduced spending when there was a longer than usual gap between SNAP disbursements. Our findings are inconsistent with the permanent income hypothesis.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16452

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: consumption smoothing ; permanent income hypothesis ; SNAP ; government shutdown

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Marks, Mindy ; Prina, Silvia ; Gernhardt, Roy
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282579
• Last update: 10.03.2025, 11:42 AM CET