Decomposing the Decline of Cash Assistance in the United States, 1993 to 2016

Zachary Parolin ()

No b9vft, OSF Preprints from Center for Open Science

Abstract: The provision of cash assistance to low-income families is an essential tool for combating child poverty. In the U.S., however, cash assistance is on the decline. Annual benefit allocations from Temporary Assistance for Needy Families (TANF) and its predecessor program fell from $34.3 billion to $7.4 billion in real value from 1993 to 2016, a 79 percent decrease. This study first introduces an accounting framework to decompose the decline of TANF cash assistance into changes in eligibility for cash assistance, accessibility of benefits among the eligible, and benefit levels among those receiving cash support. Using household-level data from the U.S. Current Population Survey, I find that declining accessibility of benefits explains 52 percent of the decline in TANF cash assistance from 1993 onward, whereas declining eligibility and benefit levels explain 21 and 28 percent, respectively. Second, the study applies reweighting techniques to measure the extent to which compositional changes in the U.S. population, such as rising employment rates among single mothers, can explain changes in eligibility, accessibility, and levels of benefit receipt. The results suggest that compositional changes explain only 22 percent of the decline of TANF cash assistance, confirming that the majority of the decline is due to reduced access and benefit levels rather than reduced demand for cash support. Adding the non-compositional share of TANF’s decline back to observed levels of cash spending in 2016 would result in nearly $20 billion in additional transfers, more than the minimum amount necessary to lift all single-mother households out of poverty.

Date: 2019-12-01
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:b9vft

DOI: 10.31219/osf.io/b9vft

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