Do Minimum Wage Increases Affect SNAP Benefits?

Snyder Thomas (), Rinkevich Senayt and Yuan Weici
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Snyder Thomas: Department of Economics, University of Central Arkansas, 201 Donaghey Ave, Conway, AR72035, USA
Rinkevich Senayt: Department of Economics, University of Central Arkansas, 201 Donaghey Ave, Conway, AR72035, USA
Yuan Weici: Department of Economics, University of Central Arkansas, 201 Donaghey Ave, Conway, AR72035, USA

The B.E. Journal of Economic Analysis & Policy, 2019, vol. 19, issue 2, 6

Abstract: The recession of the late 2000s accompanied a steep increase in the number of people on the U.S. federal Supplemental Nutrition Assistance Program (SNAP). The economy recovered, yet the number of people on SNAP remained relatively high. This study investigates whether increases in minimum wages affected the number of SNAP beneficiaries and the per-capita cost of the program. Economic reasoning suggests a minimum wage increase can decrease poverty through higher wages or increase poverty by enacting a barrier to work. Using a panel data set (1997–2015) at the state level, two-way fixed effects estimates demonstrate a nonlinear relationship between minimum wages and SNAP benefits. At low minimum wages, increases in the minimum wage reduce SNAP enrollment and benefits; however, at high minimum wages, increases in the minimum wage increase SNAP enrollment and benefits. Twenty states have already passed the minimum wage turning point. Further increases can lead to more SNAP participants.

Keywords: minimum wage; SNAP; welfare expenditure; unemployment (search for similar items in EconPapers)
JEL-codes: H50 I18 J21 J30 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/bejeap-2018-0045

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