Working Paper: NBER ID: w29800
Authors: Manasi Deshpande; Michael G. Muellersmith
Abstract: We estimate the effect of losing Supplemental Security Income (SSI) benefits at age 18 on criminal justice and employment outcomes over the next two decades. To estimate this effect, we use a regression discontinuity design in the likelihood of being reviewed for SSI eligibility at age 18 created by the 1996 welfare reform law. We evaluate this natural experiment with Social Security Administration data linked to records from the Criminal Justice Administrative Records System. We find that SSI removal increases the number of criminal charges by a statistically significant 20% over the next two decades. The increase in charges is concentrated in offenses for which income generation is a primary motivation (60% increase), especially theft, burglary, fraud/forgery, and prostitution. The effect of SSI removal on criminal justice involvement persists more than two decades later, even as the effect of removal on contemporaneous SSI receipt diminishes. In response to SSI removal, youth are twice as likely to be charged with an illicit income-generating offense than they are to maintain steady employment at $15,000/year in the labor market. As a result of these charges, the annual likelihood of incarceration increases by a statistically significant 60% in the two decades following SSI removal. The costs to taxpayers of enforcement and incarceration from SSI removal are so high that they nearly eliminate the savings to taxpayers from reduced SSI benefits.
Keywords: Supplemental Security Income; SSI; criminal justice; employment outcomes; welfare reform
JEL Codes: I38; J14; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| SSI removal at age 18 (I12) | number of criminal charges (K14) |
| SSI removal at age 18 (I12) | likelihood of incarceration (K14) |
| SSI removal at age 18 (I12) | income-generating offenses (K42) |
| SSI removal at age 18 (I12) | criminal justice involvement (K14) |
| SSI removal at age 18 (I12) | existing inequalities in incarceration rates (K14) |