During and since the Great Recession, millions of Americans have relied on government transfer and social insurance programs to make ends meet. In principle, these programs, collectively known as the ‘social safety net,’ should help replace lost income during economic downturns when unemployment is high and wages are low. But due to major restructuring in the 1990s, these programs may no longer function as well as they have in past downturns. Welfare reform, for example, created lifetime caps for receipt for welfare and made support contingent on employment. In addition, while the Earned Income Tax Credit (EITC) was greatly expanded, the tax credits the program provides are only available to those who are employed. Has the American safety net become less responsive to the needs of the unemployed and less effective during downturns?
With support from the Foundation, Robert Moffitt of Johns Hopkins University will examine the responsiveness of the social safety net during the Great Recession and its aftermath. Using the 2008 panel from the Survey of Income and Program Participation (SIPP), Moffitt will detail the contributions of each safety net program, examine the responsiveness of the safety net for families and individuals with differing socioeconomic and demographic characteristics, compare the safety net across states, and compare performance in this recession to that in past recessions both before and after the safety net was restructured.
Results will be published in several working papers as well as a comprehensive paper and monograph.