IDEAS home Printed from https://ideas.repec.org/p/fip/fedacd/97168.html
   My bibliography  Save this paper

Mitigating Benefits Cliffs for Low-Income Families: District of Columbia Career Mobility Action Plan as a Case Study

Author

Listed:
  • Elias Ilin
  • Alvaro Sanchez

Abstract

The structure of the United States social safety net features the phaseout of public assistance as household income increases, which functions as an effective marginal tax on wage gains and is commonly referred to as a "benefits cliff." This presents a disincentive for some low-income workers, especially those with children, to accept higher-paying jobs or promotions. Workforce development programs focused on helping low-income workers must contend with the challenges that benefits cliffs present to the career advancement of their clients. In this paper, we describe the overall structure of the public assistance benefits system in the District of Columbia (DC) and describe how benefits cliffs affect the financial resources of a single adult with one child. Afterward, we introduce the DC Career Mobility Action Plan (Career MAP), a five-year pilot program (2022–27), as a case study for implementing benefits cliff mitigation strategies for workers seeking to find employment and increase their earnings. Our findings suggest that Career MAP’s policies, which function as rental assistance and cash payments to offset benefits losses, reduce the effective marginal tax rates families experience below 100 percent, helping households to avoid experiencing benefits cliffs.

Suggested Citation

  • Elias Ilin & Alvaro Sanchez, 2023. "Mitigating Benefits Cliffs for Low-Income Families: District of Columbia Career Mobility Action Plan as a Case Study," FRB Atlanta Community and Economic Development Discussion Paper 2023-01, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedacd:97168
    DOI: 10.29338/dp2023-01
    as

    Download full text from publisher

    File URL: https://www.atlantafed.org/-/media/documents/community-development/publications/discussion-papers/2023/01-a-case-study-mitigating-benefits-cliffs-in-the-district-of-columbia.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.29338/dp2023-01?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Fraker, Thomas & Moffitt, Robert, 1988. "The effect of food stamps on labor supply : A bivariate selection model," Journal of Public Economics, Elsevier, vol. 35(1), pages 25-56, February.
    2. Hoynes, Hilary Williamson & Schanzenbach, Diane Whitmore, 2012. "Work incentives and the Food Stamp Program," Journal of Public Economics, Elsevier, vol. 96(1), pages 151-162.
    3. Nada Eissa & Hilary W. Hoynes, 2006. "Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply," NBER Chapters, in: Tax Policy and the Economy, Volume 20, pages 73-110, National Bureau of Economic Research, Inc.
    4. East, Chloe N., 2018. "Immigrants’ labor supply response to Food Stamp access," Labour Economics, Elsevier, vol. 51(C), pages 202-226.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Han, Jeehoon, 2022. "The impact of SNAP work requirements on labor supply," Labour Economics, Elsevier, vol. 74(C).
    2. Joel Cuffey & Timothy K. M. Beatty & Elton Mykerezi, 2022. "Work Effort and Work Requirements for Food Assistance among U.S. Adults," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 294-317, January.
    3. Schanzenbach, Diane Whitmore, 2023. "Understanding SNAP: An overview of recent research," Food Policy, Elsevier, vol. 114(C).
    4. Fayaz Farkhad, Bita & Meyerhoefer, Chad D., 2018. "The Impact of Participation in SNAP on Labor Force Decisions," 2018 Annual Meeting, August 5-7, Washington, D.C. 274180, Agricultural and Applied Economics Association.
    5. Pender, John & Jo, Young & Miller, Cristina, 2015. "Economic Impacts of Supplemental Nutrition Assistance Program Payments in Nonmetro vs. Metro Counties," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205626, Agricultural and Applied Economics Association.
    6. Wu, Kaidi, 2022. "SNAP Benefit and Labor Supply: Evidence from Taxi Drivers," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322546, Agricultural and Applied Economics Association.
    7. Dean Jolliffe & Juan Margitic & Martin Ravallion & Laura Tiehen, 2024. "Food stamps and America's poorest," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1380-1409, August.
    8. Tiehen, Laura & Jolliffe, Dean & Gundersen, Craig, 2012. "Alleviating Poverty in the United States: The Critical Role of SNAP Benefits," Economic Research Report 262233, United States Department of Agriculture, Economic Research Service.
    9. Rolf Aaberge & Ugo Colombino, 2014. "Labour Supply Models," Contributions to Economic Analysis, in: Handbook of Microsimulation Modelling, volume 127, pages 167-221, Emerald Group Publishing Limited.
    10. Hoynes, Hilary Williamson & Schanzenbach, Diane Whitmore, 2012. "Work incentives and the Food Stamp Program," Journal of Public Economics, Elsevier, vol. 96(1), pages 151-162.
    11. Federico Tagliati, 2019. "Child labor under cash and in-kind transfers: evidence from rural Mexico," Working Papers 1935, Banco de España.
    12. Martha J Bailey & Hilary Hoynes & Maya Rossin-Slater & Reed Walker, 2024. "Is the Social Safety Net a Long-Term Investment? Large-Scale Evidence From the Food Stamps Program," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(3), pages 1291-1330.
    13. Elena Castellari & Chad Cotti & John Gordanier & Orgul Ozturk, 2017. "Does the Timing of Food Stamp Distribution Matter? A Panel‐Data Analysis of Monthly Purchasing Patterns of US Households," Health Economics, John Wiley & Sons, Ltd., vol. 26(11), pages 1380-1393, November.
    14. Timothy F. Harris, 2018. "Do SNAP Work Requirements Work?," Upjohn Working Papers 19-297, W.E. Upjohn Institute for Employment Research.
    15. Timothy F. Harris, 2021. "Do Snap Work Requirements Work?," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 72-94, January.
    16. James Mabli & Irina Cheban, "undated". "Supplemental Nutrition Assistance Program Participants' Employment Characteristics and Barriers to Work," Mathematica Policy Research Reports 1ebf87cab08b460692a80530c, Mathematica Policy Research.
    17. Laird, Jennifer & Santelli, Isaac & Waldfogel, Jane & Wimer, Christopher, 2018. "Forgoing Food Assistance out of Fear: Simulating the Child Poverty Impact of a Making SNAP a Legal Liability for Immigrants," SocArXiv 6sgpk, Center for Open Science.
    18. Bruce D. Meyer & Derek Wu, 2018. "The Poverty Reduction of Social Security and Means-Tested Transfers," NBER Working Papers 24567, National Bureau of Economic Research, Inc.
    19. Tagliati, Federico, 2022. "Welfare effects of an in-kind transfer program: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 154(C).
    20. Jiyoon (June) Kim & Matthew P Rabbitt & Charlotte Tuttle, 2020. "Changes in Low‐Income Households’ Spending and Time Use Patterns in Response to the 2013 Sunset of the ARRA‐SNAP Benefit," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(4), pages 777-795, December.

    More about this item

    Keywords

    benefits cliffs; workforce development; public assistance; effective marginal tax rate;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedacd:97168. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rob Sarwark (email available below). General contact details of provider: https://edirc.repec.org/data/frbatus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.