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Do changes in oil prices affect welfare programs? Evidence from Kern County

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  • Michieka, Nyakundi M.

Abstract

In this paper, the intertemporal causal relationship between oil prices and welfare programs in Kern County is studied using monthly data between 1999:7 and 2016:8. Results from the autoregressive distributed lag (ARDL)-bounds testing approach show that there is stable long run equilibrium relationship between CalFresh caseloads, oil prices and unemployment. They also show that adjustment in CalFresh participation due to changes in oil prices and unemployment is slow, and a 10% increase in unemployment led to a 3.3% increase in CalFresh enrollment. Results from a modified Granger Causality method indicated causality running from unemployment to CalWORKs, and no causality from oil prices to CalWORKs participation. The GIRF confirmed that CalWORKs is more responsive to changes in unemployment than to oil price shocks. The FEVDC results demonstrated that contributions of the oil price shocks in explaining variations in CalWORKs were negligible.

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  • Michieka, Nyakundi M., 2017. "Do changes in oil prices affect welfare programs? Evidence from Kern County," Energy Economics, Elsevier, vol. 66(C), pages 116-121.
    • Handle: RePEc:eee:eneeco:v:66:y:2017:i:c:p:116-121
    DOI: 10.1016/j.eneco.2017.06.013
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    More about this item

    Keywords

    CalFresh; CalWORKs; Oil prices; Autoregressive distributed lag bounds testing approach;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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