Incentive to Retrench? Investigating the Interactions of State and Federal Social Assistance Programs after Welfare Reform

Spending on cash assistance from the Temporary Assistance for Needy Families (TANF) program has declined across the U.S. throughout recent decades. Simultaneously, spending on the federally-funded Supplemental Nutrition Assistance Program (SNAP) and Supplemental Security Income (SSI) programs has steadily increased. This papers investigates whether retrenchment of TANF assistance has led to increases in the participation and levels of benefit receipt of SNAP and SSI. Applying a differences-in-differences approach on household income data from 1997 to 2015, we find that a $50 policy-induced decline in states’ TANF cash assistance allocations leads to an increase of between $17 to $32 per month in federal allocations of SNAP and SSI benefits among single-mother households. From a household income perspective, these findings suggest that increases in SNAP and SSI participation have partially offset the retrenchment in TANF assistance. From a state incentive perspective, we find that state governments have the ability, and even a financial incentive, to shift social assistance caseloads to the federal government.