Working Paper: NBER ID: w27911
Authors: Robert A. Moffitt; James P. Ziliak
Abstract: We examine trends in employment, earnings, and incomes over the last two decades in the United States, and how the safety net has responded to changing fortunes, including the shutdown of the economy in response to the Covid-19 Pandemic. The U.S. safety net is a patchwork of different programs providing in-kind as well as cash benefits and had many holes prior to the Pandemic. In addition, few of the programs are designed explicitly as automatic stabilizers. We show that the safety net response to employment losses in the Covid-19 Pandemic largely consists only of increased support from unemployment insurance and food assistance programs, which did not replace the lost income for many households. We discuss possible options to reform social assistance in America that may provide more robust income floors in times of economic downturns.
Keywords: COVID-19; U.S. Safety Net; Unemployment Insurance; Food Assistance; Economic Downturn
JEL Codes: I38; J65; J78
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Economic downturns (e.g., COVID-19 pandemic) (F44) | Increased support from unemployment insurance (UI) (J65) |
| Economic downturns (e.g., COVID-19 pandemic) (F44) | Increased support from food assistance (SNAP) programs (I38) |
| Increased support from unemployment insurance (UI) (J65) | Stabilization of income during economic shocks (E63) |
| Increased support from food assistance (SNAP) (I38) | Stabilization of income during economic shocks (E63) |
| Increased program participation during the pandemic (H53) | Insufficient replacement of lost income for many households (D14) |
| Structure of the safety net (I38) | Inadequate support during economic shocks (F65) |
| Safety net programs (H53) | Increased vulnerability among low-income families during downturns (I32) |